U.S. U.S. “It’s easier to go after the small fish than the big fish, but the big fish operating major exchanges did many, many tens of thousands of transactions with xrp,” said the lawmaker.
US lawmaker urges SEC to focus on major crypto exchanges
Representative Brad Sherman, D-CA, was the chairman of the House Financial Services Subcommittee on Investor Protection. He held Wednesday’s hearing to review the U.S. Securities and Exchange Commission’s (SEC), efforts to mitigate emerging risks and protect investors.
Sherman is a Senior Member of the Foreign Affairs Committee and asked Gurbir Grewal, SEC Director for Enforcement, about XRP, and tether.
The congressman told Grewal: “You’ve gone after XRP because XRP is a security. But you haven’t gone after all the major crypto exchanges that processed tens of thousands, if not far more, [XRP] transactions.” He stressed:
If XRP was a security and you and I agree, how can these exchanges be in contravention of the law?
He continued: “And, is it enough that the crypto exchanges have said, ‘well having committed tens of thousands of violations in the past, we promise not to do anymore in the future.’ Is that enough to get you off the hook for enforcement?”
The SEC director replied: “I can’t talk about what matter we are looking at and not looking at. We have brought exchange cases, we brought one last year against Poloniex.”
Sherman’s response:
It’s easier to go after the small fish than the big fish, but the big fish operating major exchanges did many, many tens of thousands of transactions with XRP.
He added: “You know it’s a security. They were operating an illegal security exchange. They know it’s illegal because they stopped doing it, even though it was profitable. So if they know it’s illegal and you know it’s illegal and I know it’s illegal, I hope you focus on that.”
Turning his attention to stablecoin tether (USDT), Sherman said, “And then finally we have tether, which is a money market mutual fund in every way.” He noted that recently USDT “broke the buck.”
California Congressman asks the SEC director.
Were you able to tell why you decided to pursue terra and not tether?
Grewal replied: “It would be inappropriate for me to comment on who we are going after and not going after. But I understand your concerns and we’ve added resources to our crypto asset unit to look at issues that put investors at risk, including the issues you’ve raised in your question.”
SEC investigators are investigating terrausd, the algorithmic stablecoin which crashed in May with cryptocurrency terra and cryptocurrency terra. Gary Gensler (SEC Chairman) warned that many other crypto tokens could fail following the implosions of both coins.
In conclusion, Sherman told Grewal: “You’ve to take on some cases that you’re not certain of winning.”
In December 2020, the SEC charged Ripple Labs and its two top executives — CEO Brad Garlinghouse and co-founder Chris Larsen — with conducting $1.3 billion of XRP, which the regulator said was an “unregistered securities offering.” Following the lawsuit announcement, crypto exchanges in the U.S. began delisting XRP, including the Nasdaq-listed crypto exchange Coinbase.
Responding to Sherman’s statements, many people on Twitter were quick to point out that no country, including the U.S., has determined that XRP is a security. Stuart Alderoty is general counsel at Ripple.
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 … Only the court can make a determination (it’s called due process).
During Wednesday’s hearing, Congressman Tom Emmer (R-MN) also criticized the SEC’s approach to regulating the crypto industry. “It seems clear to everyone, except maybe those at the Commission, that the SEC is not regulating in good faith,” he said.
Let us know what you think of the comments made by Brad Sherman. Comment below.
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