Photo credit: Michael Nagle/Bloomberg

In an X post, Stuart Alderoty, the Chief Legal Officer of Ripple, recently slammed the Securities and Exchange Commission (SEC) for using the term “crypto asset security” and described it as a “fabricated term with no legal basis.”

Alderoty shared his criticism after the SEC sent a letter — filed in August. 30 — to the court expressing its concerns regarding the liquidation of FTX’s assets. The SEC claimed that it reserves the right to challenge transactions involving crypto assets. 

Alderoty also mentioned that the SEC needs to stop trying to deceive the judges by using a term that combines crypto assets and security in one word. Since the crypto asset security term is not found in the statute, it is deemed invalid in the eyes of the law.

SEC’s letter regarding FTX’s liquidation plans was criticized for its lack of clarity by several legal officers and community members.

Although the SEC didn’t state that crypto asset transactions would be illegal, Coinbase’s Chief legal officer, Paul Grewal, mocked the SEC’s reservation of rights, questioning, 'Why provide clarity to the market when threats and aspersions will do?” 

Alex Thorn, the Head of Research at Galaxy Research, criticized the SEC for calling dollar-backed stablecoins “crypto asset securities,”  even though the US regulator dropped the enforcement action against Paxos.

Thorn mentioned, “It’s quite absurd if you think about it. No one, including most other regulators and both parties, thinks the SEC should have oversight of genuine “number stay flat” technologies.”