Regulation

Pro-XRP Lawyer Deems SEC’s ‘Crypto Asset Securities’ Warning A Scam

Published

3 months ago

September 13, 2024

Pro-XRP lawyer Fred Rispoli has publicly criticized the U.S. Securities and Exchange Commission’s (SEC) latest investor alert, calling it misleading and suggesting it’s part of a larger scam. This comes amid backlash after the recent switch on the “crypto assets securities” stance.

SEC Attracts Backlash On ‘Crypto Asset Securities’ Saga

In a post on X, Rispoli deemed the investor alert to be a “scam” as the agency used the term “crypto assets securities.” He stated, “This post in and of itself is a scam as the SEC the same day swore to a federal judge that there is no such thing as ‘crypto asset securities.’” He also also mentioned that he had requested X Community Notes to be added to the SEC’s post.

The criticism comes as the SEC faces backlash over its sudden shift in stance on the classification of crypto assets. In a surprising move, the SEC recently filed a motion to amend its original complaint against Binance, Binance.US, and Changpeng Zhao.

In the amendment, the SEC now acknowledges that several major crypto tokens are not considered securities under its revised framework. These include Solana (SOL), Cardano (ADA), Polygon (MATIC), and other seven tokens.

The shift in stance follows a U.S. district court ruling in a related case against the crypto exchange Kraken, where the SEC’s previous broad definitions of crypto assets as securities were challenged. Hence, in its amended complaint, the SEC clarified that it uses the term “crypto asset securities” not to refer to the tokens themselves, but to the investment contracts and agreements tied to their sales.

The SEC stated 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.”

eToro Settlement In Spotlight

Moreover, this change in stance has been met with strong reactions from the crypto community. Jake Chervinsky, Chief Legal Officer of Variant, expressed his frustration on X, saying:

“I genuinely can’t get over how insane this is. 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 eToro settlement order that they wouldn’t use it to avoid confusion.”

Chervinsky’s comment reflects the growing confusion surrounding the SEC’s inconsistent language and its shifting position on crypto enforcement. Despite the SEC’s apparent shift in its legal stance, the regulatory body continues to warn investors about potential scams involving crypto assets.

In a recent investor alert, the SEC’s Office of Investor Education and Advocacy issued a warning about fraudsters exploiting the popularity of cryptocurrencies, coins, and tokens. The alert emphasizes that fraudsters often use new technologies to perpetrate investment scams and exploit the complexity of crypto assets to lure retail investors.

This alert also attracted criticism from FOX Business journalist Eleanor Terrett. She weighed in on the issue, noting, “Is now a good time to point out that the SEC is still using the term ‘crypto asset securities’ in its investor alert blasts?” Her comment underscores the ongoing use of the term despite the SEC’s legal assertion that it no longer applies to certain tokens.