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Ripple’s Chief Legal Officer, Stuart Alderoty, questioned the Securities and Exchange Commission (SEC)’s application of the phrase “crypto asset security” in documents submitted on September 2.
In a recent social media update, Alderoty noted that the phrase “crypto asset security” is absent from any legal text. He asserted that the SEC is attempting to mislead the judiciary by using this terminology.
The term ‘crypto asset security’ is not found in any statute—it’s a made-up term lacking legal foundation. The SEC must cease its efforts to mislead judges by employing it. pic.twitter.com/CyNbUbeoYM
— Stuart Alderoty (@s_alderoty) September 2, 2024
“Crypto Asset Security” is a Made-Up Term: Alderoty
In the SEC’s submission regarding FTX Trading Ltd. and other debtors’ joint Chapter 11 bankruptcy plan, the Commission stated, “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 not present in any statute—it’s a made-up term with no legal basis,” Alderoty remarked. “The SEC needs to stop trying to mislead judges by using it.”
This statement highlights Ripple’s ongoing conflict with the SEC concerning regulatory interpretations that affect the categorization of digital assets.
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SEC Asserts NFTs on OpenSea are Securities
On August 28, the non-fungible token (NFT) marketplace OpenSea received a Wells Notice from the SEC, “indicating intentions to sue” the company as the authority believes that NFTs qualify as securities.
“We’re astonished that the SEC would take action that jeopardizes creators and artists, and we’re prepared to defend our industry,” the company stated.
“However, this represents a venture into uncharted waters. By targeting NFTs, the SEC risks stifling innovation on a much larger scale: countless online artists and creatives are in jeopardy, many of whom lack the means to defend themselves,” remarked 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 announced that it will allocate $5 million to assist with legal costs for NFT artists and developers who receive a Wells notice.
“Fun fact: In 1976, the SEC determined that art galleries, even when promoting and selling to buyers with investment intentions, did not need to register with the SEC,” Alderoty remarked in response to OpenSea’s announcement.
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