U.S. lawmaker Brad Sherman wondered why the Securities and Exchange Commission (SEC) hasn’t taken on crypto exchanges facilitating Ripple (XRP) trading if it considers it a security.
Sherman raised this issue during Investor Protector. subcommittee review hearing July 19. Sherman said:
“The division has determined that XRP is a security and is pursuing XRP, but for reasons I will explain in the answers, it has not pursued exchanges where tens of thousands of illegal securities transactions took place.”
The subcommittee is investigating the enforcement role of the Securities and Exchange Commission in the crypto industry, and unit director Gurbir Grewal testified before it.
According to Sherman, the SEC’s enforcement department needs to do a better job in order to effectively fulfill its role.
“If XRP is a security — which you think so, and I think so, then why aren’t these crypto exchanges breaking the law and is it enough that crypto exchanges said, “Well, having committed tens of thousands of violations in the past, we promise nothing more do in the future?” Is that enough to absolve you of responsibility?
He added that the commission should take enforcement action against the major exchanges because they knew XRP was an illegal security “because they stopped doing it even though it was profitable.”
Some major crypto exchanges such as Coinbase, Bitstamp and Crypto.com delisted XRP after the SEC filed a lawsuit against Ripple.
Ripple strikes back
Ripple General Counsel Stuart Alderothy rebutted Sherman’s claim, pointing out that no court in the United States or anywhere else has declared the security of XRP.
Only the court can decide (this is called due process). Such is the detrimental effect of the Securities and Exchange Commission’s approach to coercive regulation – hurting people, markets, and American innovation – with unproven claims masquerading as regulation.
— Stuart Alderoty (@s_alderoty) July 19, 2022
According to Alderothy, only a court can determine whether XRP is a security.
Ripple CEO Brad Garlinghouse also expressed his opinion on the lawmaker’s statement.
Garlinghouse said the US representative’s comments show that he is only trying to advance the political agenda.
representative @BradSherman He graduated with honors from Harvard Law School. He should know better, but is trying – once again – to advance a political agenda over sound politics and ignore what the law actually says. https://t.co/ypIotiBIBf
— Brad Garlinghouse (@bgarlinghouse) July 19, 2022
Popular crypto lawyer John Deaton also spoke out on the matter, stating that the SEC “said that it does not make security decisions – ONLY the Federal District Court can.”
Please remember @SECGov DOES NOT DETERMINE whether an asset is a security.
Step back and read the opposition to the SEC #XRPHolders Petition for an injunction of Mandamus.
The Securities and Exchange Commission has stated that it does not make security decisions – ONLY the Federal District Court can. https://t.co/LL7HZ3K06p
— John Deaton (207k followers, beware of impostors) (@JohnEDeaton1) July 19, 2022
Credit : cryptoslate.com