Ripple Labs’ Chief Legal Officer, Stuart Alderoty, has criticized U.S. regulators for unfairly targeting the cryptocurrency industry in money laundering cases, while traditional banks are largely ignored.
In a recent post on X, Alderoty pointed out that the New York Federal Reserve has enabled large-scale illegal money transfers, including transactions linked to terrorist groups. He argued that this shows crypto is not the primary source of illegal financial activity.
His comments came after a Wall Street Journal (WSJ) article revealed significant failures in the New York Fed’s anti-money laundering efforts.
Billions Illegally Moved Through the Fed System
The WSJ report stated that over several years, some Iraqi financial institutions, including those run by banker Ali Ghulam, illegally transferred billions of dollars through the Fed’s system. Some of this money is suspected to have ended up with Iran’s Islamic Revolutionary Guard and militia groups linked to it.
U.S. authorities have since blocked these banks, but the report suggests the Fed only acted after more than a decade of warnings from the Pentagon.
Alderoty used this case to argue that agencies like the Securities and Exchange Commission (SEC) and the U.S. Federal Reserve have been unfairly blaming crypto while ignoring bigger problems in traditional banking.
His concerns align with others in the crypto industry, such as pro-XRP lawyer John Deaton. Deaton has previously pointed out that less than 1% of crypto transactions involve illegal activity, while between $800 billion and $2 trillion is laundered annually through traditional banking, according to the UN Office on Drugs and Crime.
Alderoty also referenced reports that major banks like HSBC, JPMorgan, and Bank of America have laundered millions for drug cartels and other illegal operations. Yet, despite this, regulators continue to focus on crypto, even blaming last year’s bank failures on digital assets—a move that’s been called “Operation Choke Point 2.0.”
Ripple CEO Shares Similar Views
Ripple CEO Brad Garlinghouse has also spoken out against the U.S. government’s hostile stance toward crypto. In a past interview with Bloomberg, he noted that the government’s approach has hurt the growth of the industry.
