Rep. French Hill recently cited Ripple’s court verdict against the SEC to emphasize the need for the commission’s reform.
The United States Securities and Exchange Commission (SEC) has been under scrutiny in recent times, especially regarding its regulatory policies in the crypto space.
Hill Cites Ripple Ruling
In a recent development, Rep. French Hill (R-Ark), chair of the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion, slammed the commission during a hearing.
The hearing titled “SEC Overreach: Examining the Need for Reform” was held yesterday on Capitol Hill. Notably, the lawmakers at the hearing deliberated on whether the SEC needs to be reformed, given the growing reports of the commission’s gross abuse.
Top crypto enthusiast Kyle shared a short clip from the hearing on X.
Gensler is getting put on blast. (Mentions XRP) pic.twitter.com/VJRlLygL6l
— Kyle (@sphynxmaine) March 20, 2024
During the hearing, Rep. Hill stated that the SEC lost in the court of public opinion and was also being trampled by federal courts.
“…The agency (SEC) is now getting trampled by the Federal courts as well.”
Specifically, the lawmaker recounted the SEC’s defeat against Ripple Labs when a federal court in New York declared that the crypto payments company did not violate the law by offering XRP on digital exchanges.
“In July 2023, a New York Judge determined that Ripple Labs did not violate federal securities law by selling its XRP token on public exchanges,” Hill said yesterday.
It bears mentioning that the SEC charged Ripple in December 2020 with offering XRP as an unregistered security from 2013 through 2020. The SEC alleged that Ripple raised over $1.3 billion through the illegal sales of XRP.
Contrary to the SEC’s claim, Judge Analisa Torres declared that Ripple’s XRP sales on digital exchanges and other distributions did not constitute investment contracts.
However, she found that Ripple violated securities laws by offering and selling XRP to institutional investors. The case is currently in the remedies phase where the court would decide the appropriate penalty for this violation.
According to the court schedule, the SEC would submit its opening remedies brief under seal tomorrow, with a redacted version slated to be filed in the public docket on March 26.
Other Cases
Meanwhile, Rep. Hill also mentioned two other crypto-related legal tussles where federal courts trampled the SEC.
He cited the SEC’s case against Grayscale Investments, in which a three-panel judge ordered the commission to reevaluate the asset manager’s request to convert its Bitcoin Trust (GBTC) to a spot Bitcoin exchange-traded fund (ETF).
“Last August, the court rejected the SEC’s reasoning for blocking Grayscale’s Bitcoin Trust from converting to an exchange-traded fund,” he remarked.
Finally, the lawmaker brought up the recent ruling by Utah’s federal judge Robert Shelby in the SEC’s lawsuit against crypto firm DEBT Box.
As reported earlier, the judge found that the SEC acted in bad faith by misrepresenting facts to obtain a temporary restraining order (TRO) against the company.
Based on the findings, Judge Shelby sanctioned the SEC and ordered it to pay DEBT Box’s legal fees. He also denied the SEC’s request to dismiss the case without prejudice, which implies that the commission cannot re-file the lawsuit later.
Reacting, Rep. Hill seemed concerned about the court sanctioning the SEC to pay DEBT Box’s legal fees for misrepresenting facts. He pointed out that the commission would have to use taxpayers’ money to pay for its failure and gross overreach.
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