Ripple’s Legal Chief Criticizes SEC's Use of 'Crypto Asset Security' Term
Author Hongji Feng Author Hongji Feng About Author Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),... Author Profile Share Copied Last updated: September 2, 2024 15:28 EDT
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Ripple’s Chief Legal Officer, Stuart Alderoty, challenged the Securities and Exchange Commission (SEC)’s use of the term “crypto asset security” in filings on September 2.
According to a recent social media post by Alderoty, the term ”crypto asset security” does not appear in any statutory text. He stated that the SEC attempted to mislead the judiciary by employing this terminology.
The term 'crypto asset security' is nowhere to be found in any statute—it's a fabricated term with no legal basis. The SEC needs to stop trying to deceive judges by using it. pic.twitter.com/CyNbUbeoYM — Stuart Alderoty (@s_alderoty) September 2, 2024
“Crypto Asset Security” is a Fabricated Term: Alderoty
In the SEC’s filing for FTX Trading Ltd. and other debtors’ joint Chapter 11 bankruptcy plan, the Commission wrote, “The Debtors’ portfolio includes crypto asset securities which the Debtors may seek to monetize and/or distribute pursuant to the Plan.”
“The term ‘crypto asset security’ is nowhere to be found in any statute—it’s a fabricated term with no legal basis,” Alderoty said. “The SEC needs to stop trying to deceive judges by using it.”
The statement reflects Ripple’s ongoing dispute with the SEC over regulatory interpretations that impact the classification of digital assets.
On August 28, the non-fungible token (NFT) marketplace OpenSea received a Wells Notice from the SEC, “threatening to sue” the company as the authority believes that NFTs are securities.
“We’re shocked that the SEC would make a move that threatens creators and artists, and we’re ready to stand up and fight for our industry,” stated the company.
“But this is a move into uncharted territory. By targeting NFTs, the SEC would stifle innovation on an even broader scale: hundreds of thousands of online artists and creatives are at risk, and many do not have the resources to defend themselves,” said OpenSea co-founder and CEO Devin Finzer.
OpenSea has received a Wells notice from the SEC threatening to sue us because they believe NFTs on our platform are securities.
We're shocked the SEC would make such a sweeping move against creators and artists. But we're ready to stand up and fight.
Cryptocurrencies have long… — Devin Finzer (dfinzer.eth) (@dfinzer) August 28, 2024
OpenSea also published a post stating that it will pledge $5 million to cover legal expenses for NFT artists and developers who receive a Wells notice.