Here Are Top Instances US Court Accused SEC of Hypocrisy, Inconsistencies

• Recently, the U.S. court ordered the SEC to explain why it should not be sanctioned for making false and misleading representations to the court.
• The court previously accused the SEC of inconsistent arguments and failing to act with a faithful allegiance to the law.
• In the Grayscale case, the court once ruled the SEC acted arbitrarily and capriciously.

In a recent tweet, Stuart Alderoty, the chief legal officer of Ripple, raised awareness about the troubling pattern emerging within the U.S. Securities and Exchange Commission’s (SEC) unyielding litigations against crypto firms. Specifically, Alderoty highlighted a series of court decisions that shed light on the SEC’s questionable practices and contradictory arguments.

The first instance was a court ruling on July 12, 2022, in the SEC v. Ripple case. According to Alderoty, the U.S. court criticized the SEC for demonstrating “hypocrisy.” The court asserted that the SEC had presented inconsistent arguments and failed to act with a “faithful allegiance to the law.”

Furthermore, Alderoty highlighted that in a separate case between the SEC and U.S.-based exchange Coinbase, on June 6, 2023, the court found that the SEC had defaulted on its duty to respond in good faith to Coinbase’s petition for crypto rulemaking.

Also, the Ripple general counsel pointed to the case between the SEC and Grayscale. Per the disclosure, the court concluded on August 29  that the SEC’s inconsistent treatment of similar products is arbitrary and capricious. Significantly, the legal language suggests intentional and unreasonable actions carried out without due consideration, disregarding relevant facts, situations, and the rights of other parties involved.

Meanwhile, the Ripple chief legal adviser spotlighted more legal troubles that the SEC has suffered. He noted that in the SEC v. Debt Box case on November 30, 2023, the court went as far as ordering the SEC to show cause why it should not be sanctioned for making false and misleading representations to the court. 

In response to the revelations, pro-XRP lawyer Bill Morgan highlighted that the SEC’s actions seemed to be the antithesis of the model litigant principles embraced in other countries such as Australia.

He cited that being a model litigant in the Australian context entails that the Commonwealth and its agencies must conduct themselves with complete propriety and fairness under the highest professional standards when participating in legal proceedings.