Stuart Alderoty, who is FinTech firm Ripple’s General Counsel, says that although his firm still has quite a lot of employees inside the U.S. (presumably since the headquarters are in San Francisco), it is “effectively” operating outside the U.S.
On 22 December 2020, the SEC announced that it had “filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.”
According to a report by CNBC, Alderoty told them:
“Essentially, its customers and its revenue are all driven outside of the U.S., even though we still have a lot of employees inside of the U.S.“
Ripple’s General Counsel also told CNBC that Ripple, which currently has two employees based in the Republic of Ireland, it is aiming to get a a virtual asset service provider (VASP) license from the Central Bank of Ireland in order to “passport” its services throughout the EU via this Irish entity. Furthermore, Ripple is apparently intending to get ab electronic money license in Ireland in the near future.
On 20 September 2022, Aldertoy talked about the detrimental effects of “regulatory hostility” toward crypto in the U.S. during a conversation with Cally Baute, who is a Senior VP at Politico, at an event called “Writing the Rules of Crypto“.
According to a report by The Daily Hodl, Ripple’s General Counsel said:
“In the past two years, we had the strongest years ever as a company. That $10 billion in volume mostly is driven offshore. And by the way this is all done compliant with anti-money laundering laws, OFAC [Office of Foreign Assets Control] laws, anti-sanction laws etc. Why is that? Why haven’t we signed a single US customer in the past two years? Because of regulatory uncertainty and really regulatory hostility...
“What we are doing here in the US and I think principally through the SEC as an institution, is we’re elevating politics and power over sound policy. And in doing that, you’re not only hurting innovation and innovators and entrepreneurs like Ripple and others… but ultimately you’re hurting the retail holder of this asset.“
On 21 September 2022, Aldertoy talked to CoinDesk TV’s flagship show “First Mover” about the SEC’s ongoing lawsuit against Ripple:
“I do believe that this policy in the United States of regulation by enforcement is a failed policy, and it’s creating havoc in the marketplace, and that havoc it in the marketplace ultimately hurts the very retail consumer that the SEC purports to protect.
“I think what we’re seeing is power and politics elevated over sound policy, and that is not a good thing. To your question, ‘why ripple?’… That is a good question. I’m not sure I have a good answer to i, but what I will tell you is that the lawsuit was filed on December 22nd 2020 on the last day of the prior administration when Jay Clayton was the chair of the SEC. The day after the lawsuit was filed, Jay Clayton left office, and within two weeks of the lawsuit being filed, the entire senior leadership team that was I think involved in the decision to file the lawsuit left the SEC.
“So why Ripple? I’m not really sure. I think we can all venture a bunch of different guesses. Maybe the SEC was tired of playing whack-a-mole with some smaller tokens, and they felt that if they could go after Ripple and indirectly attack the digital asset XRP, which Ripple relies on to facilitate its cross-border payments, maybe they thought that they can send a broader message to the entire market.
“But I think what they’ve learnt is that if you challenge a well-resourced company, that well-resourced company can put on a very robust defence and really expose the SEC that what they’re doing in this case is not applying the law. It’s not a faithful allegiance to the law. They’re seeking to remake the law, and they don’t have the power to remake the law. Only Congress can remake the law.“
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