Thursday, 2 March 2023
by Berkeley Lovelace
Recently, Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), expressed his opinion in a detailed interview with New York Magazine’s Intelligencer regarding why he believes crypto assets other than bitcoin are securities. However, Stuart Alderoty, Ripple’s chief legal officer, argues that Gensler must “recuse himself from voting on any enforcement case that raises that issue.” Alderoty insists that the SEC chair “has prejudged the outcome.”
The recent interview of SEC chair Gary Gensler may have negative implications for the U.S. securities regulator, as he has been accused of publicly discussing his prejudgment of the outcome. Bitcoin.com News recently reported on Gensler expressing his opinions during an interview with New York Magazine’s Intelligencer reporter Ankush Khardori. During the interview, the SEC chairman explained why he views the majority of digital assets, other than bitcoin (BTC), in the current crypto economy as securities.
People called us crazy for saying that the SEC thought everything other than Bitcoin was a security, but now Gensler is saying it publicly. pic.twitter.com/Q9wFjIsNH7
— LBRY 🚀 (@LBRYcom) February 28, 2023
On February 27, 2023, Ripple’s chief legal officer, Stuart Alderoty, tweeted about Gensler’s public statements following the interview. Ripple is currently in a legal dispute with the SEC to determine whether XRP tokens are securities or not. Alderoty’s tweet read, “Crypto lawyer PSA: Chair Gensler has once again declared that all cryptocurrencies except BTC are unregistered securities. He must now recuse himself from voting on any enforcement case that raises that issue, as he has already prejudged the outcome. Antoniu v. SEC (8th Cir. 1989).”
Antoniu v. SEC dealt with the issue of a man named Antoniu who appealed a decision made by the SEC that prevented him from working as a securities broker. Antoniu argued that the participation of SEC commissioner Troy Paredes in the disbarment proceedings tainted the case with the appearance of impropriety. The court ruled in favor of Antoniu, stating that the commissioner’s statements indicated that they had already determined the facts of the case before hearing it. The case established the significance of recusal by SEC staff members in specific situations to prevent the appearance of impropriety.
Jeremy Hogan, an attorney and partner at Hogan & Hogan, responded to Alderoty’s tweet by sarcastically stating that chairman Gensler was “obviously speaking not as the head of the SEC but in his capacity as a long-distance runner and lover of orange juice. So, it’s okay.” Other Twitter users in Alderoty’s thread asked the lawyer if he would take legal action, with one person asking, “Will you also approach this from a legal standpoint, [Stuart Alderoty]? Like filing motions or whatever is required to force Gensler to recuse himself?”
However, not everyone shared the same view as the Ripple legal officer, and one person called the opinion “absurd.” “Chair Gensler has not prejudged the merits of any particular case. And even if one could make such an argument stick (which is ridiculous), it would only require recusal from an appeal of an enforcement AP, not his involvement in voting on authorizing an enforcement action,” the individual responded to Alderoty’s tweet. Regarding the Antoniu v. SEC case, the court nullified all proceedings in which the commissioner had participated and instructed the U.S. securities regulator to conduct a de novo review of the evidence without any involvement from Troy Paredes.
What do you think about the debate over SEC chair Gensler’s statements on cryptocurrency and securities, and Ripple’s call for his recusal? Do you believe that Gensler’s comments demonstrate a bias against crypto assets, or do you think that he is simply expressing his opinion on the matter? Let us know your thoughts in the comments section below.