Tuesday (July 19) was a tough day for cryptocurrency exchanges that trade Ripple (XRP).
Brad Sherman, D-California, the Chair of a Congressional subcommittee focused on the Securities and Exchange Commission’s (SEC) enforcement division, called for the SEC to go after these exchanges.
In an oversight hearing, Sherman said: “The division has determined that XRP is a security and is going after XRP but, for reasons that I’ll bring up in question, has not gone after the exchanges where tens of thousands of illegal securities transactions were occurring.”
He added: “You know [XRP] is security. That means they were illegally operating a securities exchange.
As expected, Ripple’s top executives weren’t happy with Rep. Sherman’s comments. CEO Brad Garlinghouse and General Counsel Stuart Alderoty took to Twitter to voice their disagreements, with Alderoty describing the lawmaker’s comments as a pernicious effect of the SEC’s “regulation by enforcement” approach.
The cryptocurrency community has been heavily critical of this type of tactic employed by the watchdog, which they say has had a damaging effect on the industry. The SEC has been accused of stifling innovation in the cryptocurrency space by taking a heavy-handed regulatory approach. This has led to many companies and projects leaving the US, in search of friendlier jurisdictions.
Ripple’s General Counsel also reminded Rep. Sherman that the United States has not yet classified XRP as a security and that the case is currently being challenged in court- and that only the court can determine whether XRP is a security.
“When elected officials don’t understand that the mere filing of a case by the SEC doesn’t determine anything…it’s more than concerning,” Alderoty’s tweet said.
Can I get a fact check on aisle 2, please? Rep Sherman, the US has not (in fact, no country has) determined XRP to be a security. When elected officials don’t understand that the mere filing of a case by the SEC doesn’t determine anything…it’s more than concerning. https://t.co/Py6jWIl2Gf
— Stuart Alderoty (@s_alderoty) July 19, 2022
Ripple’s CEO Brad Garlinghouse was also quick to point out the fact that despite Rep. Sherman’s background as a “magna cum laude at Harvard Law, he opted “to advance a political agenda over sound policy and ignoring what the law actually says.”
Rep @BradSherman was magna cum laude at Harvard Law. He must know better but is trying -yet again- to advance a political agenda over sound policy and ignoring what the law actually says. https://t.co/ypIotiBIBf
— Brad Garlinghouse (@bgarlinghouse) July 19, 2022
Rep. Sherman’s comments come as Ripple is facing a lawsuit from the SEC that alleges that it violated investor protection laws by selling XRP as an unregistered security. The price of the $18 billion market cap altcoin has been in a downtrend since the SEC lawsuit was announced in December 2020, and it remains to be seen how the market will react to Sherman’s recent comments.
Price Action
As of press time, XRP is changing hands at $0.3762, up 3.70% intraday.
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