Ripple’s Chief Legal Officer Stuart Alderoty has sparked debate about the U.S. Securities and Exchange Commission’s (SEC) approach to classifying cryptocurrencies. He highlighted William Hinman’s 2018 statement, which he believes shows the agency’s “hypocrisy” in its treatment of XRP compared to Ethereum.
Ripple CLO’s Fiery Take on XRP Classification
Alderoty’s remarks came as he shared a significant internal SEC email chain, captioned “Receipt Attached,” that adds to the controversy. The email, dated June 4, 2018, features William Hinman, the SEC’s then-Director of Corporation Finance, discussing Ethereum’s regulatory status.
“Attached please find a draft of the speech I had mentioned, which suggests that we do not need to see a need to regulate Ether, as it is currently offered, as a security,” Hinman wrote in the email. Notably, he emphasized that this language would only be finalized if everyone involved agreed. He also mentioned an upcoming meeting with Ethereum co-founder Vitalik Buterin to discuss the Ethereum Foundation’s operations.
Receipt attached. pic.twitter.com/gtIeChNUgB
— Stuart Alderoty (@s_alderoty) November 18, 2024
This email stands in stark contrast to the SEC’s approach toward XRP, which has faced allegations of being an unregistered security for years. Critics, including Ripple, argue that XRP’s decentralized nature is no different from Ethereum’s, making the differing regulatory treatment unjustified.
The Legal Battle
Ripple has faced significant legal challenges from the SEC, including a $125 million penalty imposed in August 2024. However, recent developments have shifted momentum. Despite this partial win, the SEC doubled down on its stance, filing an appeal on Wednesday October 2. Moreover, within two weeks, Ripple responded with a cross-appeal, intensifying the legal battle.
Judge Phyllis Hamilton recently ruled in favor of Ripple Labs, its subsidiary XRP II LLC, and CEO Brad Garlinghouse, granting a joint motion for final judgment on class claims. “The Court finds that final judgment should be entered pursuant to Rule 54(b),” Judge Hamilton stated, noting that several claims against Ripple, including allegations under California securities laws, were resolved in Ripple’s favor.
This followed Ripple’s petition for a final ruling on unresolved class claims and sought a stay on certain state law claims. The court scheduled a trial date for January 21, 2025, to address remaining issues, with pretrial activities currently suspended.
Moreover, the SEC’s classification inconsistencies are further underscored by its actions regarding Ethereum. Earlier, the regulator closed its probe into Consensys, Ethereum’s parent company, before the launch of spot Ether ETFs in July 2024. On top of that the SEC also confirmed during a settlement with eToro that ETH is not a security, which enraged the XRP community.
Also Read: Ripple vs Traditional Banking: Brad Garlinghouse’s Opinions!
