The U.S Securities and Exchange Commission (SEC) is aggressively launching enforcement against multiple crypto linked firms and executives under Gary Gensler’s regime. However, the commission is facing a continuing streak of legal setbacks. Ripple’s legal chief launched another attack on U.S. SEC highlighting a recent blow.
Ripple’s Legal Chief fires back
Stuart Alderoty, Chief Legal Officer of Ripple stated that the U.S SEC’s losing streak continues. The 2nd Circuit court in the SEC v Govil case asserted that the SEC cannot seek a substantial disgorgement award without first demonstrating actual financial harm to investors, setting a precedent of ‘no harm, no foul.’
Earlier, Ripple’s chief legal officer expressed his concerns regarding the SEC’s recent legal defeats under the leadership of Chair Gary Gensler. This came after another setback for the SEC in the Fifth Circuit Court, occurring subsequent to Ripple’s partial victory in the XRP lawsuit in July 2023. He added that the commission under Gensler’s leadership may be veering away from its commitment to upholding the law.
The U.S. SEC’s recent enforcement drive holds a series of high profile lawsuits against two of the biggest cryptocurrency exchanges Binance and Coinbase. This also includes going after executives like FTX founder Sam Bankman-Fried and Binance founder Changpeng Zhao.
As reported the Fifth Circuit Court of Appeals on October 31 deemed the SEC’s stock buyback disclosure rule as arbitrary and lacking reasonable explanation. The decision made by the court presents an opportunity for the SEC to justify its considerations thoroughly and establish a sound basis for its decisions.
Watchdog on backfoot?
John Deaton, XRP holders’ lawyer in the U.S. SEC Vs Ripple also took a toll on this situation. He highlighted that over 75,000 XRP holders intervened in the crucial Ripple case contending that the SEC’s overly broad allegations unsupported by decades of caselaw are causing harm to investors.
The escalating series of legal challenges faced by the U.S. SEC has sent it to backfoot. However, the outcomes of these vital cases may reshape the dynamics of regulatory oversight. Meanwhile, Ripple’s legal victories combined with the courts’ scrutiny of SEC actions underscore the changing landscape of crypto market regulations.