Ripple Execs highlight SEC for BlockFi’s collapse

Lavina Daryanani
Source: CNBC

Per a recent press release, the U.S. Securities and Exchange Commission collected a record of $6.4 billion in penalties, disgorgement, and pre-judgment interest. The same turned out to be the highest amount in its history. It also marked a substantial increase from the $3.852 billion registered in the fiscal year 2021. Alongside, the Commission brought 760 enforcement actions this year, a 9% increase from last year.

Commenting on the same, SEC Chair Gary Gensler said,

“I continue to be impressed with our Division of Enforcement. These numbers, though, tell only part of the story. Enforcement results change from year to year. What stays the same is the staff’s commitment to follow the facts wherever they lead.”

Evidently, the Enforcement Division is working with a “sense of urgency” to protect investors, hold wrongdoers accountable and deter future misconduct. Regulators, however, do not expect the new record to be broken anytime soon. Elaborating on the same, Gurbir S. Grewal, Director of the Division of Enforcement asserted,

“While we set a Commission record this past fiscal year for total money ordered at $6.4 billion, including a record $4.2 billion in penalties, we don’t expect to break these records and set new ones each year because we expect behaviors to change. We expect compliance.”

Ripple Stalwarts Blame SEC for Demise of BlockFi

Opining on what the SEC labeled as a “win” for regulation and chalking out the tangled web that the industry is in at the moment, Ripple’s General Counsel —Stuart Alderoty—tweeted:

In fact, Ripple’s CTO David Schwartz was on the same page. The executive opined on Twitter that the SEC “may have” deliberately made BlockFi “so weak” financially that it had “no choice” other than storing crypto at FTX to continue operating. Thus, per Schwartz, the agency obliquely triggered BlockFi’s collapse.

Amid the market volatility in July, FTX injected around $250 million into BlockFi. Resultantly, the exchange emerged as BlockFi’s saving grace. However, per filings made in mid-November, BlockFi was loaned $250 million in FTX’s native token, FTT.

Read More: FTX Loaned BlockFi $250 Million in $FTT

Using the same tangent, CryptoLaw founder—John E Deaton—revealed how this could potentially transfer into a fraud case. Replying on the same thread on Twitter, he tweeted,

If the reports are true and FTX’s $250M loan to BlockFi was conditioned on BlockFi holding its customer funds on FTX, @DOJCrimDiv can use this transaction alone to establish jurisdiction and specific intent in a fraud case.