A day after the arrest of Sam Bankman-Fried (SBF), the general counsel of Ripple, Stuart Alderoty has responded to the charges leveled against SBF by the Securities and Exchange Commission (SEC).
SEC Files charges against Bankman-Fried
Observe that the SEC formally brought charges against the former CEO of the now-defunct cryptocurrency exchange FTX. The Securities Act of 1933 and the Securities Exchange Act of 1934 both contain anti-fraud laws, which the Securities and Exchange Commission accused SBF of breaching. In addition, the SEC asks for a court order preventing Bankman-Fried from breaking the securities laws again by forbidding him from buying, selling, offering, or issuing securities to the general public, other than for his own account.
The SEC claimed that SBF was behind a conspiracy that misled stock investors in FTX. The SEC has accused Bankman-Fried of concealing the transfer of client assets to his cryptocurrency trading business, Alameda Research, while soliciting more than $1.8 billion from equity investors. According to a statement from SEC chair Gary Gensler:
“We allege that SBF built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto.”
The response from Ripple’s general counsel
The SEC’s allegations against SBF, the former CEO of the previous second-largest crypto exchange by trading volume, were clarified by Stuart Alderoty, the general counsel of Ripple, in a recent tweet.
The SEC’s case against Bankman-Fried, according to Alderoty, is an attempt by the organization to recoup money for “FTX’s sophisticated equity investors.” He stated that individual investors are unimportant to the regulatory agency as they have been abandoned to fight alone in bankruptcy court. Alderoty stated that:
“To be clear: The SEC’s tag-along complaint against SBF seeks to recover funds for FTX’s sophisticated equity investors, not the consumers.”
In response to Alderoty, Arturo Portilla stated that:
“In other words, the SEC is only attempting to recover the funds of those “sophisticated” investors who not only couldn’t be bothered to conduct serious due diligence on FTX but also assisted SBF in persuading retail users that FTX was a reliable and legitimate enterprise.”
SEC’s regulatory strategy is criticized by Alderoty
It is noteworthy that the general counsel for Ripple has been vocal in criticizing the SEC’s approach to regulation of the cryptocurrency market. Prior to this, Alderoty has alleged that the SEC prioritizes defending its territory at the expense of American investors. According to Alderoty, the SEC is less concerned with who suffers harm as a result of its efforts to establish itself as the crypto industry’s police force.
Remember how Alderoty referred to the lawsuit against investors as a “rug pull” after the SEC accused Ripple of selling securities without registering them. As a result of the lawsuit, investors suffered significant losses.
SBF was detained in the Bahamas at the request of the US Department of Justice, according to TheCrypto Basic. Charges of wire fraud, securities fraud conspiracy, and money laundering were brought against him. A few hours after his arrest, the SEC disclosed that it was developing charges against Bankman-Fried independent of those that led to his arrest.
Increase in SBF’s legal issues
The Commodity Futures Trading Commission (CFTC) yesterday filed charges against the CEO of FTX, which caused SBF’s legal issues to worsen. By diverting consumers’ money for his expenses, the CFTC claimed that Bankman-Fried had violated the Commodity Exchange Act.
According to court documents submitted by the CFTC on December 13 in the Southern District of New York,
“Contrary to SBF’s representations and without disclosure to FTX customers, Alameda and FTX commingled funds and freely used FTX customer funds as if they were their own, including as capital to deploy in their own trading and investment activities.”