Bulletins

SEC should go after 'big fish' crypto exchanges, US lawmaker says

The leader of the House's investor protection subcommittee criticized the SEC for pursuing Ripple over XRP but not challenging exchanges that offered the cryptocurrency.

SEC headquarters in Washington

The SEC has been in an intense court battle over whether the XRP cryptocurrency is a security.

Photo: Saul Loeb/AFP via Getty Images

The Securities and Exchange Commission should be going after crypto exchanges that offered XRP, the chairman of the House investor protection subcommittee said Tuesday.


In an oversight hearing closely watched by supporters of Ripple and the XRP cryptocurrency, California Rep. Brad Sherman questioned SEC Enforcement Director Gurbir Grewal on why the agency isn't investigating exchanges that offered the XRP cryptocurrency.

“You've gone after XRP because XRP is a security, but you haven't gone after all the major crypto exchanges that process tens of thousands, if not far more, transactions,” said Sherman, a Democrat representing parts of the Los Angeles metro area. “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?"

Whether XRP is in fact a security is subject to one of the most intense ongoing court battles in crypto. The SEC sued Ripple in December 2020, accusing the company of failing to register roughly $1.4 billion worth of XRP as securities. Ripple, however, maintains XRP is a utility token for payments, not a speculative asset, and that it was issued prior to Ripple’s founding.

Grewal said he can’t “talk about what matters we are looking at or not looking at,” but noted the SEC had brought a case against the crypto exchange Poloniex for offering unregistered securities.

Sherman countered, “It's easier to go after the small fish than the big fish, but the big fish operating the major exchanges did many, many, tens of thousands of transactions with XRP. You know it's [a] security, that means they were illegally operating a securities exchange.” He added that many exchanges have stopped offering XRP.

Grewal noted that SEC has beefed up its crypto-focused enforcement team but said it would be inappropriate to comment further.

Sherman said the SEC is “going to have to take on some cases you are not certain of winning.”

Ripple has aggressively fought the case in court and its CEO, Brad Garlinghouse, recently told Protocol the firm would leave the U.S. if it lost. The judge overseeing the case recently ordered the SEC to produce documents related to the case sought by Ripple and called out the SEC for "hypocrisy" in fighting the release.

Shortly after the hearing, Ripple General Counsel Stuart Alderoty called for a "fact check on aisle 2," noting that the mere filing of a case by the SEC does not make XRP a security. "Only the court can make a determination — it's called due process," Alderoty said in a tweet. "This is the pernicious effect of the SEC’s (regulation) by enforcement approach – harming people, markets and American innovation – with unproven allegations masquerading as regulation."

More clarity from lawmakers on securities regulation would be helpful, Sherman acknowledged in closing the hearing, which also covered enforcement of the SEC’s climate disclosure rules and the gamification of investing.

“No definition is more important than to define security, since that's what the SEC does,” Sherman said. “Congress really hasn't acted. Courts have acted with the Howey Test, which was not focused on digital assets, as it was written in the 1940s.”

Latest Bulletins

Mobile game revenue will decline for the first time in history this year, market research firm Newzoo now says in a revised outlook for the 2022 global games market. While the whole game industry is expected to contract by 4.3% — another first since Newzoo began tracking the market in 2007 — the company is predicting a 6.4% decline in mobile game spending on top of a 4.2% decline in console game spending.

Keep ReadingShow less

Amazon is planning to lay off thousands of employees, Protocol has learned, ahead of what the company has cautioned will be a slow holiday shopping season.

Keep ReadingShow less

Google agreed to pay $391.5 million and make changes to its user privacy controls as part of a settlement with a coalition of 40 state attorneys general. The coalition accused Google of misleading customers about location-tracking practices that informed ad targeting.

Keep ReadingShow less

FTX has filed for bankruptcy and the crypto company also announced that founder Sam Bankman-Fried has resigned as CEO.

Keep ReadingShow less

Salesforce recently updated its internal policies to make it easier for managers to terminate employees for performance issues without HR involvement, Protocol has learned, a move that comes as the software giant looks to shed as many as 2,500 jobs.

Keep ReadingShow less

The Consumer Financial Protection Bureau said fraud and scam reports comprise the top complaint it receives about virtual currencies — and that customers are finding little help from companies when it happens.

Keep ReadingShow less

Elon Musk sent his first email to Twitter staff late Wednesday, warning of a difficult economic road ahead and telling employees they need to be in office for a minimum of 40 hours per week. "Sorry that this is my first email to the whole company, but there is no way to sugarcoat the message," he began, ominously.

Keep ReadingShow less

Binance isn’t buying FTX after all. The crypto giant said Wednesday it has decided that it “will not pursue the potential acquisition” based on a “corporate due diligence” review.

Keep ReadingShow less

On Wednesday, John Kerry unveiled a plan for a new carbon credit program aimed at mobilizing private capital to help middle-income countries transition away from coal and move toward renewable energy.

Keep ReadingShow less

Meta announced it was laying off more than 11,000 employees Wednesday morning, slashing jobs in its recruiting department and refocusing its remaining team on AI discovery, ads, and its investment in the metaverse.

"I want to take accountability for these decisions and for how we got here," Mark Zuckerberg wrote in a message to employees that was also posted online. "I know this is tough for everyone, and I’m especially sorry to those impacted."

Keep ReadingShow less

Al Gore has one mission this week at COP27, and that’s to give climate negotiators what he hopes will be a critical tool to address the crisis at hand: an independent, global inventory of greenhouse gas emissions, down to the individual facility.

The Climate TRACE coalition just released the world’s most detailed inventory of global greenhouse gas emissions, which Gore, a founding member, is unveiling on Wednesday at the United Nations climate summit in Egypt.

Keep ReadingShow less

Way back in March, your friendly Protocol Climate team offered you some tips for writing a climate plan that doesn’t suck. Surely you took that advice. But if for some reason you didn’t, the United Nations has your back.

Keep ReadingShow less

Binance CEO Changpeng “CZ” Zhao said Tuesday the crypto powerhouse signed a deal to acquire rival FTX.

Keep ReadingShow less

Salesforce is preparing for a major round of layoffs that could affect as many as 2,500 workers across the software vendor, Protocol has learned, in a bid to cut costs amid a new activist investor challenge and harsh economic conditions.

Keep ReadingShow less

BlockFi has introduced a new digital assets interest product for accredited investors, after previously agreeing to shut down a yield-paying crypto product that the SEC said was illegal.

Keep ReadingShow less

The Justice Department said Monday it seized $3.4 billion worth of bitcoin stolen in the 2012 hack of the Silk Road dark web marketplace.

Keep ReadingShow less

U.S. election infrastructure is exceedingly secure, and voter fraud here is sorare it’s comparable to your annual chances of getting struck by lightning. Despite this, former President Donald Trump and a long list of allies in the Republican Party have spent the last two years questioning the overall integrity of the U.S. election system. Many of those allies are now candidates themselves, and their coordinated attack on the country’s status as a democracy is not a relic of 2020. Some have already startedrepeating these “Big Lie” charges ahead of next week’s midterms. And the social platforms that help them spread their message haveprepared few measures to stop it.

Keep ReadingShow less

The White House just laid out its climate tech priorities to reach net zero by 2050.

Keep ReadingShow less

Coinbase said Thursday that it lost more users in the third quarter. But the decline wasn’t the disastrous drop that Wall Street was expecting, and that sparked a rally in the crypto company’s shares after-hours.

Keep ReadingShow less

The Biden administration announced $9 billion in funding Wednesday to improve home efficiency, which could help support the installation of up to 500,000 heat pumps. With winter approaching and utilities warning of gas shortages, there are some major challenges facing the technology that money can be used to tackle.

Keep ReadingShow less

Block beat earnings expectations, with strong growth largely fueled by its Cash App business. Traders sent shares up more than 12% after-hours Thursday.

Keep ReadingShow less

Stripe is laying off 14% of its staff, its co-founders said Thursday, as the fintech startup must start "building differently for leaner times."

Keep ReadingShow less

Roku saw its revenue growth slow in Q3, and warned investors Wednesday that things are about to get worse: “A lot of Q4 ad campaigns are being canceled,” said Roku CEO Anthony Wood during the company’s Q4 earnings call. “We’re seeing lots of big categories pull back. Telecom, insurance … even toy marketers are planning on reducing their spending.”

Keep ReadingShow less

Green jobs and corporate climate pledges abound, but skilled sustainability professionals are scarce.

Keep ReadingShow less

Robinhood reported a drop in third-quarter revenue but also a narrower loss on Wednesday, in a sign that it might be stabilizing its business as it attempts to recover from a staggering drop in the stock and crypto trading activity that fueled its growth.

Keep ReadingShow less
Bulletins