Ripple Labs’s Legal Chief Slams US Regulators for Scapegoating Crypto

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Stuart Alderoty, Ripple Labs’ Chief Legal Officer, has publicly criticized the U.S. Federal Reserve and the Securities and Exchange Commission (SEC) for scapegoating the crypto industry for money laundering problems.

On September 10, Alderoty noted the New York Federal Reserve’s failure to implement proper safeguards, which allegedly allowed hundreds of millions of dollars to flow into terrorist financing.

Money Laundering: A Bigger Issue Beyond Crypto

In a post on X, Alderoty argued that money laundering is not a problem exclusive to cryptocurrency. He pointed out that traditional financial systems, including major institutions like the Federal Reserve, have also been implicated in large-scale illicit transactions.

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The comment drew widespread support from the XRP community, which has long been critical of U.S. regulators’ stance on crypto. Alderoty’s remarks were part of a larger debate about the alleged targeting of the cryptocurrency sector by regulators in what has been dubbed “Operation Choke Point 2.0.”

This refers to efforts by U.S. authorities, including the SEC, to disrupt the relationship between Wall Street and the crypto industry, allegedly using banking failures as a pretext to blame crypto.

Crypto Community Reacts

Prominent figures in the XRP community, including pro-XRP attorney John Deaton and Ripple CEO Brad Garlinghouse, backed Alderoty’s claims. Deaton argued that traditional banks, including major players like JPMorgan, Bank of America, and Wells Fargo, have been responsible for billions of dollars in money laundering—far more than cryptocurrencies. He also shared statistics indicating that Bitcoin and other digital currencies account for only a small fraction of global illicit transactions.

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Alderoty’s criticism comes as the U.S. continues to ramp up regulatory pressure on the cryptocurrency sector. Senator Elizabeth Warren and SEC Chair Gary Gensler have been vocal opponents of crypto, pushing for tighter regulations and enforcement. Warren has spearheaded efforts to curtail crypto’s integration with traditional financial institutions, while Gensler has led numerous lawsuits against crypto companies, including Ripple, accusing them of violating securities laws.

Ripple has maintained that the U.S. is taking an overly aggressive approach compared to other nations. Garlinghouse noted that the Biden administration’s hostility toward crypto has stifled innovation in the sector and driven companies to seek friendlier jurisdictions. He criticized the SEC’s strategy of regulating through enforcement, contrasting it with other countries’ more progressive regulatory frameworks.

Meanwhile, XRP, Ripple’s native token, saw a modest price increase following Alderoty’s remarks. The token rose nearly 1% over the past 24 hours, with its trading volume jumping by 40%. Ripple is also rolling out highly anticipated US dollar-pegged stablecoin RLUSD in the coming weeks.