Ripple Labs’ Chief Legal Officer, Stuart Alderoty, has slammed U.S. 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 reported role in enabling large-scale illicit transfers, including those tied to terrorist groups, as evidence that crypto is not the primary culprit.

Iraqi Banks Reportedly Used Fed System to Launder Money

His criticism follows a Wall Street Journal (WSJ) story that exposed significant 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 system. Some of the money is suspected to have been channeled to Iran’s Islamic Revolutionary Guard as well as several militia groups linked to it.

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

With such cases as proof, Alderoty argued that agencies like the Securities and Exchange Commission (SEC) and the U.S. Federal Reserve have unfairly scapegoated crypto while turning a blind eye to much larger infractions in the traditional banking sector.

Less Than 1% of Crypto Transactions Linked to Illegal Activities

His concerns echo those of other crypto advocates, such as pro-XRP lawyer John Deaton, who previously shared striking statistics showing that less than 1% of crypto transactions are tied to illicit activities. In comparison, between $800 billion and $2 trillion is reportedly laundered annually through the traditional financial system, according to data from the UN Office on Drugs and Crime.

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

Despite such information, the focus of U.S. regulators remains on crypto, with the authorities going as far as blaming last year’s bank failures on digital assets in a move labeled Operation Choke Point 2.0.

In a past interview with Bloomberg, Ripple CEO Brad Garlinghouse shared those sentiments, stating that the U.S. government’s antagonism towards crypto has had a damaging effect on the industry’s growth.