Summary:
- SEC Commissioner Caroline Crenshaw opposes Ripple settlement deal, arguing it weakens investor protections.
- The deal, valued at $50 million, aims to resolve the ongoing litigation between Ripple and the SEC.
- Crenshaw warns the settlement undermines court-confirmed rulings and could create a regulatory vacuum.
- Despite the deal, Judge Analisa Torres’ final approval is still required to close the case.
Crenshaw’s Concerns: Settlement Weakens Legal Protections
In a recent statement, SEC Commissioner Caroline Crenshaw publicly voiced strong objections to the proposed settlement between Ripple Labs and the U.S. Securities and Exchange Commission (SEC). Crenshaw argues that the deal, which would see Ripple pay $50 million to resolve allegations related to unregistered XRP sales, could significantly weaken the protections for investors that have been solidified through years of court rulings.
The case, which has been ongoing since 2020, involved allegations that Ripple had violated securities laws through its sales of XRP, particularly in institutional transactions. While the courts found Ripple guilty of violations in its institutional sales, they ruled that the company did not violate securities laws in its programmatic retail sales.
A Shift in SEC’s Crypto Enforcement Strategy
The settlement deal is part of a broader shift in the SEC’s approach to regulating the crypto industry. Under the leadership of former SEC Chairman Jay Clayton, the SEC initially sought massive penalties against Ripple, including a $2 billion fine. However, the agency settled for a much smaller $125 million in civil penalties last year. Now, the proposed deal would see $75 million of that amount returned to Ripple, and a prior injunction would be lifted.
Crenshaw believes this deal undermines previous legal victories and erodes the SEC’s credibility in both the courtroom and the crypto industry. She warns that the deal introduces uncertainty, as the proposed settlement seems to favor a hypothetical regulatory framework that is not yet in place.
The Ripple Case: A Part of a Larger Trend?
Crenshaw also connects the Ripple settlement to a larger trend in the SEC’s crypto enforcement actions since the return of former President Donald Trump to office. According to her, this shift is part of a broader “programmatic disassembly” of the agency’s control over the crypto industry, creating confusion among legal experts and damaging the SEC’s institutional integrity.
What’s Next for Ripple?
Although a settlement agreement has been reached, the case is far from closed. James Fillan, an attorney following the case, notes that Judge Analisa Torres must first issue an indicative ruling to approve the settlement. If the judge grants approval, both Ripple and the SEC will seek a limited remand from the Second Circuit Court of Appeals, ultimately allowing the settlement to be finalized.
Until then, the litigation continues, with both sides waiting for judicial approval before the long-running case can officially come to an end.
This situation raises important questions about the future of cryptocurrency regulation and the balance between investor protection and innovation in the industry. As the SEC continues to navigate this evolving space, it remains to be seen how future cases will be handled and whether this settlement sets a precedent for other crypto-related litigation.