During an appearance Monday on CNBC, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler declined to comment on whether Ether is unregistered security, the question at the heart of the Ripple lawsuit.
SEC boss won’t say if Ether is a security, how about Ripple?
“We don’t get involved in these types of public forums, talking about anyone project, one possible circumstance and give legal advice over the airways that way,” Gensler stated.
Thousands of crypto projects are trying to raise money from the public, but they must share a range of relevant disclosures with investors. The SEC boss also bemoaned the lack of compliance within the industry, claiming way too many cryptocurrency projects that are securities are trying to masquerade as something else to not go through the hassle of registering with the SEC.
“Unfortunately, way too many of these are trying to say Well, we are not a security. We are just something else”, he added.
During his tenure, Gensler has repeatedly dodged the same question, claiming that the SEC will not comment on specific cryptocurrencies. The SEC’s lawsuit against Ripple, alleging that XRP is unregistered security, has extended into its second year.
He also refused to comment on the ConsitutionDAO project, a decentralized autonomous organization that made headlines in late 2021. Constitution DAO lost its bid to billionaire collector Kenneth Griffin who shelled out $43.2 million for a rare copy of the U.S. Constitution. Critics often argue that the SEC is out of step with modern technologies, given that the Howey Test, a litmus test for determining whether a certain token is a security, dates back to May 1946.
According to the SEC boss, the basic idea of raising money from the public and providing them with basic disclosures should still apply. Gensler disagrees with this argument. He stated that it is important to introduce innovation into securities law.
“Our role at the SEC is to ensure that you, the public, still get the basic protections,” he added.
Elsewhere, not long ago the SEC filed a letter of supplemental authority in support of its motion to strike Ripple’s pivotal “fair notice” defense. The pending motion, which could prove to be decisive in the closely-watched legal battle, was originally filed in April.
SEC cites a December 20 verdict in the SEC v. Fife case, in which the Northern District of Illinois court delivered a blow to defendant John M. Fife by granting the SEC’s motion to strike his “fair notice” defense.
The SEC now argues that the ruling provides additional authority to destroy Ripple’s critical defence. Ripple’s “fair notice” defense revolves around the premise that the regulator had failed to notify the company about its alleged violations of federal securities laws, while also bemoaning the broad definition of the term “investment contract.”
In the pre-trial phase of the case, Ripple’s lawyers also made it clear that a lack of clarity is harmful to the industry as a whole.
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