Congressman Brad Sherman (D-CA), chairman of the House Financial Services Subcommittee on Investor Protection, held a hearing Wednesday to examine the SEC’s efforts to address emerging risks and protect investors.
Sherman, a senior member of the Foreign Affairs Committee, questioned SEC Director of Enforcement Gurbir Grewal about XRP and tether during the hearing.
“You’ve gone after XRP because XRP is a security,” the congressman told Grewal. However, you have not pursued all of the major crypto exchanges that processed tens of thousands, if not millions, of [XRP] transactions.” He emphasized:
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“If XRP is a security, as you and I believe it is, how come these crypto exchanges are not breaking the law?”
The SEC is looking into terra USD (UST), an algorithmic stablecoin that collapsed along with cryptocurrency terra in May. (LUNA). Following the demise of the two coins, SEC Chairman Gary Gensler predicted that many more crypto tokens would fail.
Finally, Sherman advised Grewal, “You have to take on some cases that you’re not certain of winning.”
The SEC charged Ripple Labs and its two top executives, CEO Brad Garlinghouse and co-founder Chris Larsen, with conducting an “unregistered securities offering” of $1.3 billion in XRP in December 2020. Following the announcement of the lawsuit, crypto exchanges in the United States began delisting XRP, including the Nasdaq-listed crypto exchange Coinbase.
Congressman Tom Emmer (R-MN) also criticized the SEC’s approach to regulating the crypto industry during Wednesday’s hearing. “It appears clear to everyone, except perhaps those at the SEC, that the SEC is not regulating in good faith,” he said.