Stuart Alderoty, chief legal officer at enterprise blockchain Ripple, has identified the SEC’s habit of filing “follow-on’ actions after the DOJ as a “major” source of waste at the agency.
“These cases add little value, often result in uncollectible penalties, and are more about headlines than investor protection,” he said.
It is rather common for the SEC’s civil complaints to parallel criminal charges filed by the DOJ.
Alderoty himself mentioned the FTX debacle as an example of the SEC following DOJ prosecutions with its own enforcement actions.
The SEC filed civil securities fraud charges against former FTX box Sam Bankman-Fried in late 2022.
In September, Prager Metis, the former auditor of the failed exchange, also agreed to pay a $1.95 million fine to settle SEC charges after being accused of negligence.
On top of that, the SEC filed charges in the Coinbase insider trading case in tandem with the DOJ back in 2022.
Alderoty has opined that the SEC should focus on its “core mission.”
“The SEC should focus on its core mission instead of duplicating efforts,” the Ripple executive said.
This opinion has been supported by Paul Grewal, chief legal officer at Coinbase. “Yes. Especially when the DOJ could have pursued securities fraud charges but after carefully investigating chose only to charge wire fraud,” Grewal wrote on X.
The SEC’s crypto enforcement is over
Last year, Alderoty, one of the most vocal SEC critics, urged the agency to ditch all non-fraud cryptocurrency cases.
As reported by U.Today, former SEC official John Reed Stark claimed that the SEC’s crypto enforcement was effectively done.
He has also predicted that the agency’s appeal against Ripple would likely be dropped.
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