Ripple CLO Blasts US Regulators for Targeting Crypto Industry

Stuart Alderoty, the Chief Legal Officer of Ripple Labs, has criticized U.S. regulators for unfairly singling out the cryptocurrency sector in money laundering investigations, while allowing traditional banks to evade scrutiny.

In a recent post on X platform, Alderoty highlighted a report from the New York Federal Reserve indicating its complicity in facilitating large-scale illicit transfers, including those related to terrorist organizations, suggesting that crypto is not the main issue.

Iraqi Banks Allegedly Exploited Fed System for Money Laundering

This criticism follows a Wall Street Journal (WSJ) article that uncovered significant deficiencies in the New York Fed’s anti-money laundering protocols.

The report disclosed that over the years, several Iraqi financial institutions, including those linked to a banker named Ali Ghulam, illicitly transferred billions of dollars through the Fed system. A portion of these funds is believed to have been funneled to Iran’s Islamic Revolutionary Guard and various militia groups associated with it.

While U.S. authorities have taken action against the implicated banks, the WSJ report stated that the Fed only responded after a decade of negligence, despite receiving alerts from the Pentagon regarding the illegal financial transactions.

Using these instances as evidence, Alderoty contended that agencies like the Securities and Exchange Commission (SEC) and the U.S. Federal Reserve have unjustly targeted cryptocurrencies while overlooking far more significant violations within the traditional banking system.

Less Than 1% of Crypto Transactions Associated with Illegal Activities

His statements resonate with those of other cryptocurrency advocates, including pro-XRP attorney John Deaton, who has previously shared compelling statistics showing that fewer than 1% of crypto transactions are linked to illegal activities. In stark contrast, an estimated $800 billion to $2 trillion is laundered each year through traditional financial channels, according to data from the UN Office on Drugs and Crime.

The Republican candidate running for a Senate seat in Massachusetts also referenced reports indicating that major banks, such as HSBC, JPMorgan, and Bank of America, have been involved in laundering substantial sums for drug cartels and other illegal activities.

Despite this information, U.S. regulators continue to direct their focus at cryptocurrencies, even attributing last year’s bank failures to digital assets in a maneuver dubbed Operation Choke Point 2.0.

In a previous interview with Bloomberg, Ripple CEO Brad Garlinghouse echoed these sentiments, asserting that the U.S. government’s hostility towards crypto has had a detrimental impact on the industry’s development.