Stuart Alderoty
Stuart Alderoty is the Chief Legal Officer at Ripple, the company behind XRP — a payment settlement system and currency exchange network that processes transactions globally. [1][2]
Education
Stuart Alderoty studied for a Bachelor of Arts degree at Rutgers University. Afterward, he studied for a Doctor of Law (JD) degree at Rutgers Law School - Newark. [1]
Career
Stuart Alderoty has over 30 years of legal experience with expertise in regulatory affairs and complex litigation. He served as a Managing Partner at American Express from 2002 to 2010. From 2010 to 2016, he was a General Counsel at HSBC North America Holdings, and from 2016 to 2019, he served as the General Counsel at CIT. [1]
Ripple
Stuart joined Ripple as its General Counsel & Chief Legal Officer in January 2019 reporting to Chief Executive Officer Brad Garlinghouse. His role is to oversee all legal services and manage the company’s global legal, policy, and Bank Secrecy Act (BSA) compliance teams. [3][4]
“As we continue to work with financial institutions and regulators across the globe to drive home the importance of fostering innovation while protecting consumers, I could not think of a better addition to Ripple’s leadership bench and our global legal team than Stuart,” said Brad Garlinghouse, Ripple CEO.
“He brings a level of experience and expertise that will be vital in supporting not only Ripple’s growth but growth of the overall industry.”[3]
Stuart Alderoty also commented on his role at Ripple:
“Blockchain technology is transforming the financial services industry and Ripple has been at the forefront for both its technology and thoughtful approach to policy,” said Alderoty.
“I am thrilled to join Ripple and work alongside this great team Brad has assembled as we find new ways to partner with leading policy makers and continue to create significant solutions for Ripple’s users and end-customers throughout the world.”[3][4]
Ripple v SEC
In December 2020, the Securities and Exchange Commission (SEC) announced that it filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered digital asset securities offering. The complaint alleged that Ripple raised funds, beginning in 2013, through the sale of digital assets known as XRP in an unregistered securities offering to investors in the U.S. and worldwide. Ripple also allegedly distributed billions of XRP in exchange for non-cash consideration, such as labor and market-making services. [8]
SEC's Dismissal
On October 19, 2023, the SEC dismissed all claims against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen. In the filing in the U.S. District Court for the Southern District of New York, the SEC notified the court the parties involved in its case against Ripple “have stipulated to the dismissal with prejudice”, suggesting there was no need to schedule an upcoming trial[9]
In response to the filing, Stuart Aldeorty called the move “a surrender by the SEC” rather than a settlement. [10]
"The SEC made a serious mistake going after Brad & Chris personally – and now, they’ve capitulated, dismissing all charges against our executives. This is not a settlement. This is a surrender by the SEC." [10]
Stuart Alderoty & SEC
LBRY
On August 3, 2022, in a bid to call for the whole crypto industry to work together and fight the Securities and Exchange Commission (SEC) and its “overreach”, Stuart Alderoty went to Twitter and shared the SEC’s argument in an LBRY case:
"The SEC argued in LBRY: "Even if a fraction of people" buy a token for "investment purposes, you’re in securities land." Does every jeweler now book a one way ticket to "securities land" because a "fraction" of their customers are “investing” in the oldest commodity - gold?"
"The SEC keeps relegating the CFTC to the kids’ table. That's their regulation by enforcement strategy – attack projects w/ varying resources so they can expand their jurisdiction beyond “securities” by telling judges w/a straight face we’re the government so we must be right"
"Time for the industry to lock arms and defend this overreach together." - he concluded[5]
The LBRY tweeted in agreement with Alderoty saying:
"The SEC arguments in our most recent hearing have to be read to be believed. We probably sound hysterical at times, but thee SEC really is making an argument so broad as to include every cryptocurrency, including Bitcoin and Ethereum." [14]
On October 27, 2022, SEC Commissioner Hester M. Peirce released a dissenting statement regarding the LBRY lawsuit emphasizing that the commission had recently initiated numerous enforcement actions against cryptocurrency exchanges, such as Ripple, LBRY, Kraken, Binance, and Coinbase. [13]
Stuart Alderoty expressed his support for Commissioner Hester Peirce’s stance against perceived injustices in the LBRY lawsuit. Alderoty thanked Peirce and suggested that when ongoing injustices occur in non-fraud cases, especially when consumers are still awaiting resolution for fraud cases, it might be necessary to disregard standard protocols and raise concerns more vocally and promptly, potentially even by submitting an amicus brief to address the issue. [15]
SEC's Muddied Rules
In June 2022, Stuart Alderoty expressed his frustration with the SEC’s regulatory environment on X. He criticized the lack of clarity in the classification of digital assets in the US, including Ethereum, which he said was still in regulatory limbo. Alderoty’s comments came after a court ruling on William Hinman’s speech-related documents, which could have had an impact on the outcome of the SEC v Ripple case and XRP. [17]
“4 years since the (in)famous Hinman speech, and we’re nowhere closer to knowing how to classify digital assets in the US – keeping every crypto, including ETH, in regulatory limbo.” - Alderoty tweeted. [19]
He went on to say:
“I penned some thoughts for @Fortune why enough is enough, @SECGov.”[17]
Alderoty highlighted conflicts of interest in Hinman’s announcement that ETH is not a security. In 2018, when William Hinman delivered his speech, he did not state receiving millions of dollars from Simpson Thacher, his old law firm that remains a member of the Enterprise Ethereum Alliance (EEA).
“The EEA has an objective to drive the use of Enterprise Ethereum and Mainnet Ethereum blockchain technology.”[18]
Alderoty also noted that,
“A securities commission can only regulate securities. Like a hammer wanting everything to be a nail, the SEC is keeping everything murky so it can argue every crypto is a security.”
“The US is not the “Wild West” due to existing anti-fraud and anti-money laundering laws. Yet, without a comprehensive regulatory framework, the US will continue to fall further behind other responsible global economic centers. Recent bipartisan legislative efforts in Congress are promising.” - he went on to say[18]
"In the four years since Hinman’s speech that did nothing but muddy the crypto waters, the U.S. still desperately needs clear rules of the road that embrace innovation while protecting consumers and the integrity of markets." - Alderoty concluded in his article[18]
Gary Gensler
Alderoty also shared his thoughts in July 2022 on SEC Chair Gary Gensler’s video[16] about the agency’s regulatory position in the crypto industry. [7]
“I would rethink the “logic” of saying that crypto markets have to succumb to SEC jurisdiction, [because] that’s like saying drivers of electric cars don’t need seatbelts. It’s actually more like punishing electric car drivers [because] they don’t use SEC-owned and controlled gas stations." [6][16]
In November 2023, Stuart Alderoty expressed reservations about the string of legal defeats suffered by the SEC during Gary Gensler’s tenure. These remarks follow a setback for the SEC in the Fifth Circuit Court after Ripple’s victory in the XRP lawsuit in July 2023. Alderoty characterized this sequence of events as a “deeply concerning trend” in which the SEC, under the leadership of Chair Gary Gensler, appears to be straying from its commitment to upholding the law. Alderoty expressed concern about the SEC’s repeated arbitrary and capricious actions in court cases, suggesting a troubling pattern under Gensler’s leadership. [11]
"Another day and another Court finds that the SEC again acted arbitrarily and capriciously. Is anyone else concerned about this very troubling pattern of the SEC flouting any faithful allegiance to law under Mr. Gensler?" - Stuart tweeted on Nov. 1, 2023[12]
