Gary Gensler Suggests Crypto Operators Consulting Lawyers May Have Unlawful Offerings
Gary Gensler, the Chairman of the U.S. Securities and Commission (SEC), has expressed doubt about the compliance of cryptocurrency service providers with existing financial laws. He specifically highlighted the use of legal consultants by crypto entities, implying that it could be due to their potentially unlawful securities offerings.
Gensler drew a parallel between attorneys reaching agreements with crypto projects and the business model employed by digital asset operators. According to him, this highlights that most crypto assets meet the investment contract test and should be classified as securities.
However, Stuart Aldertory, Ripple’s chief legal officer, disagreed with Gensler’s comments. Aldertory argued that Gensler’s suggestion could be seen as opposing individuals’ right to consult with counsel, which is protected by the U.S. Constitution.
SEC’s Litigations Against Non-Compliant Crypto Entities
The SEC has initiated multiple litigations against crypto entities that it considers non-compliant and involved in fraudulent activities, scams, and bankruptcies. One notable case is SEC v Ripple, which ended in a partial victory for Ripple as certain token sales were ruled not to be securities.
Furthermore, in Grayscale’s suit against the SEC, a panel of judges ordered Gensler’s commission to review Grayscale’s proposal to convert its Bitcoin trust into a spot Bitcoin ETF. This is a product that the SEC has historically denied.
Hot Take: Ripple Challenges Gensler’s Stance on Crypto
Ripple’s chief legal officer, Stuart Aldertory, criticizes Gary Gensler’s remarks about consulting lawyers in the crypto industry. Aldertory argues that Gensler’s comments threaten individuals’ right to seek legal advice, which is protected by the U.S. Constitution. This highlights the ongoing tension between Ripple and the SEC over their legal battle regarding the classification of Ripple’s XRP token as a security. While Gensler and the SEC continue to express skepticism about crypto compliance, Ripple and other crypto entities maintain their position that their offerings are not securities. The outcome of these legal disputes will have significant implications for the regulation of the cryptocurrency market in the United States.
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