By Tom Blitzer
Key Insights
- SEC faces criticism from Ripple’s CLO & Coinbase’s Paul Grewal for APA violations & unclear crypto regulations.
- GAO reveals SEC’s SAB 121 rule drafted without regulator/public input, violating APA & Congressional Review Act.
- Pro-XRP lawyers urge the SEC to demonstrate leadership & cease its aggressive stance as the industry calls for transparency intensify.
In recent developments, the SEC has faced continuous critique and challenges from Ripple’s Chief Legal Officer (CLO) Stuart Alderoty, along with others from the crypto community, such as Coinbase CLO Paul Grewal and pro-XRP lawyers John Deaton and Bill Morgan.
Their comments come in light of repeated violations of the Administrative Procedure Act (APA) by the SEC. The crypto community leaders assert that the regulatory body needs to realign its practices to promote clarity and fair treatment for the crypto industry.
Ripple’s CLO Raises Eyebrows with WSJ Article
Stuart Alderoty, Ripple’s CLO, has recently shared an opinion piece from the Wall Street Journal that questions the SEC Chair, Gary Gensler’s effectiveness, by posing, “Is Gary Gensler ever going to win a case?” This follows the recent verdict from the Fifth Circuit Court of Appeals, which critiqued the SEC’s stock-buyback rule during the U.S. Chamber of Commerce v. SEC lawsuit.
Persistent Violations by the SEC
Over the past several months, the SEC has come under fire for its continuous infractions against the APA. This has led to widespread discussions, particularly when Grayscale argued for months that the SEC’s denial of GBTC’s conversion to a spot Bitcoin ETF directly contradicts the APA and the Exchange Act.
Paul Grewal, Coinbase’s CLO, echoed these sentiments, pointing out that numerous federal courts of appeal, including the DC Circuit in Grayscale’s case and now the 5th Circuit, have held that the SEC acted in breach of the APA. Grewal highlighted the crucial role of the judiciary, calling it “our last, best hope.”
GAO Reveals SEC Oversight
To fuel the fire, the Government Accountability Office (GAO) recently revealed that the SAB 121 rule, implemented by the U.S. SEC, was established without the involvement or feedback of other regulators or the general public. This lack of collaboration and transparency directly contravenes the stipulations of the APA and the Congressional Review Act.
Pro-XRP Lawyers Weigh In
John Deaton, a staunch supporter of XRP, has emphasized the necessity for SEC Commissioners to demonstrate leadership rather than behave as political operatives. Deaton has articulated concerns regarding the diminishing credibility of the SEC.
In a proactive step, he has called upon the Financial Services Committee to issue a subpoena, drawing attention to the numerous subpoenas being received by American entrepreneurs from Gensler.
Bill Morgan, sharing similar views, stated that the recent actions seem heavily influenced by political motives. He was candid in expressing his belief that the SEC needs to cease its aggressive stance towards the crypto industry.