Ripple Labs’ chief legal officer has criticized the SEC for repeatedly using the term “crypto asset security,” calling it a made-up phrase without any legal basis. In an Aug. 30 filing, the SEC raised concerns that it might contest any plan by the failed crypto exchange FTX to use stablecoins to repay its creditors.
The SEC pointed out that its portfolio includes “crypto asset securities.” Ripple’s chief legal officer, Stuart Alderoty, claims that the SEC is trying to mislead judges by using this terminology. Furthermore, in an X post on Sept. 2, he pointed out the term doesn’t appear in any law.
In an update from August on the SEC’s legal battle with the crypto exchange Kraken, the Federal Court for the Northern District of California criticized the term, calling it “unclear at best and confusing at worst.”
SEC NFT ruling questioned
Moreover, Alderoty criticized the regulator’s Wells notice issued to NFT marketplace OpenSea. Specifically, the notice suggests that the tokens sold on the platform might be unregistered securities.
Additionally, he argued that the agency had already addressed a similar issue over 40 years ago. Back then, they ruled that an art gallery didn’t need to register with the SEC, even if buyers had investment intentions when purchasing art.
According to Alderoty, the Art Appraisers of America, representing the artist William Nelson, sought clarification on whether selling lithographs and print drawings could breach laws related to unregistered securities. The gallery was concerned that collectors might buy these artworks as investments and sell them later for a profit. In this instance, the SEC decided not to take any enforcement action.
However, the letter stated that the decision might change if the gallery provided inaccurate information about the art sale or if the SEC discovered new facts or circumstances that could lead to a different outcome. It also clarified that this decision wasn’t a final legal judgment on the broader issue but rather a ruling specific to this case.
