Ripple’s general counsel has claimed that the US Securities and Exchange Commission (SEC) is using the non-existent term “cryptocurrency securities” to deceive the courts.

Stuart Alderoty explained that the financial regulator claims that all cryptocurrencies except Bitcoin are digital securities. However, according to information on the official website of the US Commodity Futures Trading Commission (CFTC), virtual currencies, including Bitcoin, are classified as commodities under the Commodity Exchange Act (CEA).

“The term ‘cryptocurrency security’ does not appear in any law – it is a fabricated term with no legal basis. The SEC must stop deceiving the court system by using this term,”
wrote Alderoti on social media X.

The SEC used the term in its lawsuit against Ripple, as well as in a lawsuit against bankrupt crypto exchange FTX, among other companies in the industry, Alderoti noted. However, in the Ripple case, Judge Analisa Torres ruled that XRP is not considered a security if it is traded on a secondary market. That means there is regulatory clarity around XRP, but the SEC continues to extend the made-up term to other altcoins, the lawyer insists.

With Alderoti’s statements
agreed Ethena Labs legal counsel Zach Rosenberg noted that the SEC used the term “cryptocurrency securities” to refer to cryptocurrencies in a lawsuit against consulting firm Galois Capital Management. The agency accused the firm of improperly storing crypto assets. Rosenberg noted that the order does not even mention the specific crypto assets that the SEC believes were sold as “cryptocurrency securities.” It also lacks a rationale for why something “sold as a security” would fall under the asset custody rules in the first place.

In July, Alderothi donated 624,000 XRP (around $300,000) to the presidential election campaign of US presidential candidate Donald Trump, who promised to support the crypto industry and bring clarity to the regulation of digital assets.