Ripple CLO Criticizes US Regulators for Using Crypto as a Scapegoat in Money Laundering Scandals

Ripple Labs chief legal officer Stuart Alderoty has criticized US regulators for unfairly targeting the cryptocurrency industry in money laundering investigations while allowing traditional banks to slip under the radar.

In a recent X post, Alderoty pointed to the New York Federal Reserve’s role in allowing large-scale illicit transfers, including those linked to terrorist groups, as evidence that crypto is not the main guilty

Iraqi banks reportedly used the Fed’s system to launder money

His criticism follows a Wall Street Journal (WSJ) story that exposed major gaps in the New York Fed’s anti-money laundering measures.

The article revealed that over several years, some Iraqi financial institutions, including those owned by a banker named Ali Ghulam, illegally moved billions of dollars using the Fed’s system. Part of the money is suspected to have been channeled to Iran’s Islamic Revolutionary Guard Corps, as well as various militia groups linked to it.

While U.S. authorities have moved to clamp down on offending banks, the WSJ report said the Fed acted only after more than a decade of neglect, even after receiving warnings from the Pentagon about illicit financial activities.

Using these cases as evidence, Alderoty argued that agencies such as the Securities and Exchange Commission (SEC) and the US Federal Reserve have unfairly scapegoated crypto while turning a blind eye to much larger breaches in the banking sector. traditional

Less than 1% of crypto transactions linked to illegal activities

His concerns echo those of other crypto advocates, such as pro-XRP attorney John Deaton, who previously shared startling statistics showing that less than 1% of crypto transactions are linked to activities illicit By comparison, according to data from the United Nations Office on Drugs and Crime, between $800,000 and $2 trillion is laundered through the traditional financial system each year.

The Republican candidate for the Massachusetts Senate seat also pointed to reports that major banks, including HSBC, JPMorgan and Bank of America, have been involved in laundering millions for drug cartels and other illegal operations.

Despite this information, US regulators continue to focus on crypto, with authorities going so far as to blame last year’s bank failures on digital assets in a move called Operation Choke Point 2.0.

In a past interview with Bloomberg, Ripple CEO Brad Garlinghouse shared these sentiments, stating that the US government’s antagonism towards crypto has had a detrimental effect on the growth of the industry.

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