Fred Rispoli, a lawyer known for his pro-XRP stance, has harshly criticized the U.S. Securities and Exchange Commission’s (SEC) latest investor alert on “crypto asset securities,” calling it misleading and part of a larger “scam.” This backlash follows the SEC’s abrupt shift in its stance on the classification of several major crypto tokens, sparking confusion within the crypto community.
SEC’s Stance on ‘Crypto Asset Securities’ Under Fire
In a post on X (formerly Twitter), Rispoli labeled the SEC’s investor alert as deceptive. He pointed out that, on the same day the alert was issued, the SEC had told a federal judge that there was “no such thing as ‘crypto asset securities.'” Rispoli went further, requesting X Community Notes to be added to the SEC’s post for additional context.
This criticism comes amid growing frustration over the SEC’s evolving classification of digital assets. Recently, the agency filed an amended complaint against Binance and its CEO Changpeng Zhao, acknowledging that major crypto tokens like Solana (SOL), Cardano (ADA), and Polygon (MATIC) are not considered securities under its revised framework.
SEC’s Revised Legal Strategy
The SEC’s shift follows a U.S. district court ruling in a related case against crypto exchange Kraken, which challenged the regulatory body’s broad classification of crypto assets as securities. In its revised complaint, the SEC clarified that when it uses the term “crypto asset securities,” it refers not to the tokens themselves, but to the investment contracts and agreements tied to their sales.
The SEC explained in its filing, “As the SEC has consistently maintained since the very first crypto asset Howey case, the term is a shorthand reference… the security is not simply the [crypto asset], which is little more than an alphanumeric cryptographic sequence.”
Criticism from the Crypto Community
Rispoli’s critique mirrors widespread frustration within the crypto space. Jake Chervinsky, Chief Legal Officer of Variant, also expressed dismay at the SEC’s conflicting terminology, noting on X: “The SEC used the term ‘crypto asset securities’ eight times in the eToro settlement order they issued on THE SAME DAY they told a federal court they wouldn’t use it to avoid confusion.”
This inconsistency has raised concerns about the SEC’s regulatory clarity and legal framework surrounding digital assets, leading to further confusion among investors and stakeholders.
SEC’s Investor Alert and Its Impact
The SEC’s Office of Investor Education and Advocacy recently issued a new investor alert, warning the public about the risks of fraud in the crypto market. The alert highlights how fraudsters often exploit the complexity and popularity of cryptocurrencies to perpetrate investment scams targeting retail investors.
While the alert aimed to protect investors, it drew further criticism for its use of the term “crypto asset securities.” FOX Business journalist Eleanor Terrett joined the conversation, questioning the timing of the SEC’s continued use of the term, despite its legal position that the classification no longer applies to certain tokens.
The Broader Implications
The ongoing debate over the SEC’s handling of crypto regulation highlights the broader uncertainty surrounding the treatment of digital assets under U.S. law. As the regulatory landscape continues to evolve, both investors and the crypto industry remain on edge, awaiting clearer guidelines on how digital tokens will be classified and regulated in the future.
The SEC’s shifting positions, particularly its use of the term “crypto asset securities,” have left market participants seeking more transparency and consistency. Whether the SEC will address these concerns or maintain its current course remains to be seen, but the continued pushback from the crypto community signals that this issue is far from resolved.
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