US Congressman questions SEC’s lack of action against ‘big fish’ exchanges if Ripple is a security

US lawmaker Brad Sherman has questioned why the Securities and Exchange Commission (SEC) has not gone after crypto exchanges facilitating Ripple (XRP) trades if it considers it to be a security.

Sherman raised this question during the Investor Protector subcommittee oversight hearing on July 19. Sherman said:

“The division has determined that XRP is a security and is going after XRP but, for reasons that I’ll bring up in questions, has not gone after the exchanges where tens of thousands of illegal securities transactions were occurring.”

The subcommittee is investigating the SEC’s enforcement role in the crypto industry, and the division director, Gurbir Grewal, testified before it.

In Sherman’s view, the SEC enforcement division needs to do better to play its role effectively.

“If XRP is a security — and you think it is, and I think it is, why are these crypto exchanges not in violation of law and is it enough that the crypto exchanges have said ‘well, having committed tens of thousands of violations in the past, we promise not to do anymore in the future?’ Is that enough to get you off the hook for enforcement?”

He added that the commission should bring enforcement actions against the major exchanges since they knew XRP was illegal securities “because they stopped doing it even though it was profitable.”

Some major crypto exchanges like Coinbase, Bitstamp, and delisted XRP after SEC filed a lawsuit against Ripple.

Ripple fights back

Ripple’s general counsel Stuart Alderoty has refuted Sherman’s statement by pointing out that no court in the United States or anywhere else has declared XRP security.

According to Alderoty, only a law court can determine whether XRP is a security.

Ripple CEO Brad Garlinghouse also expressed his view of the lawmaker’s statement.

Garlinghouse said the US representative’s comments show that he is only trying to advance a political agenda.

Popular crypto lawyer John Deaton also weighed in on the matter, saying the SEC has “stated that it doesn’t make security determinations — ONLY the Federal District Court can.”

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