Ripple Legal Chief Reveals SEC’s Settlement Offer
Ripple’s legal chief officer, Stuart Alderoty, recently disclosed the settlement offer made by the US Securities and Exchanges Commission (SEC) before the agency filed a lawsuit against Ripple in December 2020.
XRP’s Classification as a Security
In December 2020, the SEC charged Ripple, its co-founder Christian Larsen, and CEO Bradley Garlinghouse with conducting an unregistered digital asset securities offering that raised over $1.3 billion. Alderoty recalled the terms of a settlement offer made by the SEC before filing the lawsuit. The offer required Ripple to publicly acknowledge that XRP was a security and gave a short window for compliance.
“Before the SEC sued Ripple, Chris and Brad (3 years ago today) they offered us the following settlement: the SEC would announce to the market that XRP is a security and the market would be given a short window to “come into compliance.””
Despite this demand from the SEC, crypto businesses in the US have long argued that current securities laws are not suitable for cryptocurrencies. The lack of efforts from the SEC to establish a crypto-specific regulatory framework has been criticized.
However, in July 2023, Judge Analisa Torres ruled that XRP was not a security for retail buyers. The SEC dropped charges against Garlinghouse and Larsen earlier.
SEC’s Failure in Establishing Crypto Compliance
Alderoty pointed out that the SEC never provided clear guidelines for crypto compliance. Despite criticism and companies moving offshore due to regulatory uncertainty, the US markets regulator failed to create compliance standards for the industry even after three years of filing the XRP lawsuit. Instead, the agency adopted an enforcement-first approach, targeting major crypto exchanges like Coinbase and Binance.
Hot Take: Ripple CLO Criticizes SEC’s “Hypocritical” Filing
Ripple’s Chief Legal Officer, Stuart Alderoty, has criticized the US Securities and Exchanges Commission (SEC) for its “hypocritical” interlocutory filing, stating that it has no impact. Alderoty revealed that the SEC had offered a settlement to Ripple before filing the lawsuit in December 2020. The SEC wanted Ripple to publicly declare XRP as a security and provide a short compliance window. However, the SEC’s classification of XRP as a security was proven wrong in court. Alderoty also criticized the SEC for failing to establish clear crypto compliance guidelines, leading to regulatory uncertainty in the industry.
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