Ripple CLO Criticizes SEC’s “Record Fines” as Misguided Bragging

Stuart Alderoty, the Chief Legal Officer of Ripple Labs, has publicly chastised the U.S. Securities and Exchange Commission (SEC) for its recent success claims. Alderoty made the argument that the SEC’s jubilant tone about record-breaking fines exposes more serious problems with the agency’s oversight tactics in a scathing statement posted on X.

Alderoty Condemns SEC’s Enforcement Record

In response to the SEC’s fiscal year 2024 enforcement report, Alderoty likened the agency’s approach to misguided academic performance. He remarked, “The SEC bragging about record fines collected is like a professor boasting about their highest-ever class failure rate and the most cheating scandals. It’s not a measure of success – it’s an indictment of oversight gone terribly wrong, driven by perverse incentives.”

The SEC’s report highlighted 583 enforcement actions in fiscal year 2024, securing $8.2 billion in financial remedies—an all-time high. Alongside the announcement, SEC Chair Gary Gensler emphasized the agency’s commitment to maintaining market integrity. Gensler stated, “The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable.”

However, Alderoty’s critique reflects a growing frustration among Ripple executives regarding the SEC’s regulatory approach. Ripple has been embroiled in a legal battle with the SEC, arguing that the agency’s actions stifle innovation while failing to provide clear guidelines for cryptocurrency regulation.

Notably, Gary Gensler recently announced his resignation as SEC Chair, marking the end of a tenure often criticized for aggressive enforcement tactics. While Gensler framed the record penalties as a success, critics like Alderoty see them as evidence of misplaced priorities that harm the financial and crypto sectors alike.

This ongoing tension highlights the divide between regulators and industry leaders on how to foster innovation while protecting investors. As the SEC transitions to new leadership, the debate over effective enforcement and oversight strategies remains far from resolved.