US Congressman Brad Sherman called on the US Securities and Exchange Commission (SEC) to prosecute major cryptocurrency exchanges that traded XRP, which the regulator considers a security. “It’s easier to catch small fish than big ones, but large exchanges operating on large exchanges have made many, many tens of thousands of transactions with XRP,” the legislator said.
US lawmaker urges SEC to focus on big crypto exchanges
Congressman Brad Sherman (D-California), chairman of the House Financial Services Subcommittee on Investor Protection, held a hearing on Wednesday to examine the efforts of the US Securities and Exchange Commission (SEC) to mitigate emerging risks and protect investors.
During the hearing, Sherman, who is a senior member of the Foreign Relations Committee, questioned SEC Director of Enforcement Gurbir Grewal regarding XRP and a leash.
The congressman said to Greval, “You were persecuting XRP because XRP is a security. But you didn’t go after all the major crypto exchanges that handled tens of thousands, if not much more. [XRP] deals.” He emphasized:
If a XRP is a security, and you think so, and I think so, why are these crypto exchanges not breaking the law?
He continued: “And is it enough that cryptocurrency exchanges have said: “Having committed tens of thousands of violations in the past, we promise not to do it again in the future.” Is that enough to absolve you of responsibility?
The director of the SEC responded, “I can’t speak to what we look at and what we don’t look at. We filed trade cases, we filed one last year against Poloniex.”
It’s easier to catch small fish than big ones, but the big exchanges that run the big exchanges have done many, many tens of thousands of transactions with XRP.
He added: “You know it’s a security. This means that they illegally managed the securities exchange. They know it’s illegal because they stopped doing it even though it was profitable. So if they know it’s illegal and you know it’s illegal and I know it’s illegal, I hope you focus on it.”
A congressman from California asked the director of the SEC:
Can you tell us why you went for terra instead of tether?
Grewal replied, “It would be inappropriate for me to comment on who we are persecuting and who we are not persecuting. But I understand your concerns, and we have added resources to our crypto asset department to address issues that put investors at risk, including the issues you raised in your question.”
The SEC is investigating terrausd (UST), an algorithmic stablecoin that crashed in May along with the terra (LUNA) cryptocurrency. Following the explosion of two coins, SEC Chairman Gary Gensler warned that many crypto tokens would fail.
Sherman concluded by telling Grewal, “You have to take on some cases that you are not sure you will win.”
In December 2020, the SEC accused Ripple Labs and two of its top executives — CEO Brad Garlinghouse and co-founder Chris Larsen — of running $1.3 billion worth of transactions. XRP, which the regulator said was “an unregistered offering of securities.” After the announcement of the lawsuit, cryptocurrency exchanges in the United States began delisting XRPincluding Nasdaq-listed crypto exchange Coinbase.
Responding to Sherman’s claims, many people on Twitter were quick to point out that no country, including the US, has determined that XRP is a security. Stuart Alderothy, General Counsel at Ripple, tweeted on Wednesday:
When elected officials don’t understand that simply filing a lawsuit with the SEC solves nothing… it’s more than a worry… Only the court can decide (this is called due process).
During Wednesday’s hearing, Congressman Tom Emmer (R-MN) also criticized the SEC’s approach to regulating the crypto industry. “It seems obvious to everyone, with the possible exception of the members of the Commission, that the SEC regulates in bad faith,” he said.
What do you think of Congressman Brad Sherman’s comments? Let us know in the comments below.
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