David Schwartz, Ripple’s Chief Technology Officer (CTO) and a key figure behind the XRP Ledger and XRP token, recently criticized the U.S. Federal Reserve for its sanctions on United Texas Bank. The bank, a member of the Federal Reserve System, faced a “cease and desist” order from the Fed over its involvement with cryptocurrency users.
Fed Issues Cease and Desist Order to United Texas Bank
Schwartz commented on a post by Dennis Porter, co-founder of the Satoshi Action Fund, who shared a screenshot of the Fed’s ruling on United Texas Bank. The document stated that the bank failed to manage risks and comply with anti-money laundering (AML) laws and the Bank Secrecy Act when dealing with foreign correspondent banking and virtual currency customers.
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Schwartz disagreed with how regulators, including the Fed, are attempting to control the cryptocurrency industry through indirect methods. He criticized this approach as “an end-run around due process” and urged courts to intervene. In his view, regulators should directly target cryptocurrency companies if they want to enforce penalties, rather than punishing their business partners.
Government Punishes Crypto Firms Through Business Partners
Schwartz argued that the government is avoiding direct action against crypto firms, instead targeting companies that work with them. He claimed this deprives crypto firms of business opportunities without granting them the due process rights they deserve.
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Meanwhile, Ripple remains in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC).
Some members of Congress have expressed concerns that SEC Chairman Gary Gensler may be overstepping his authority. However, after Ripple’s victories in 2023 and August 2024, the SEC is expected to appeal.
