SEC Commissioner Criticizes Ripple Settlement as Crypto Enforcement Weakens
Key Takeaways:
- The SEC has resolved its Ripple Labs lawsuit, lowering the fine from $125 million to $50 million.
- Commissioner Caroline Crenshaw vehemently criticizes the agreement, describing it as a decline in legal responsibility and investor protection.
- The action shows a more general change in the SECs attitude toward crypto control during the Trump administration.
Settling for far less than first sought, the U.S. Securities and Exchange Commission (SEC) has ended its protracted legal conflict with Ripple Labs. The outcome has generated debate within the Commission itself, as Commissioner Caroline Crenshaw has strongly disagreed and expressed grave doubts about the SECs future course on digital asset enforcement.
Read More: Ripple CLO Slams SECs Retreat, Urges Clear Crypto Rules After XRP Lawsuit Ends
SEC Returns Escrow Funds, Settles with Ripple for $50 Million
On May 8, the SEC formally said it had settled with Ripple Labs and its top executives, CEO Brad Garlinghouse and Executive Chairman Chris Larsen. Ripple will pay a total of $50 million under the agreement, far below the first $2 billion requested and the $125 million penalty imposed by a judge in 2024.
The settlement also restores approximately $75 million now held in escrow back to Ripple and vacates the courts prior injunction barring Ripple from providing unregistered securities in the future. Especially, the deal does not compel Ripple to acknowledge fault about the first claims that its XRP token sales to institutional investors breached U.S. securities laws.
This result signals the conclusion of a legal dispute that started in December 2020 under then-Chair Jay Clayton, when the SEC sued Ripple alleging it raised money via unregistered XRP sales. A federal court in 2023 partially agreed, finding that while Ripples institutional transactions broke securities regulations, its programmatic sales to ordinary investors did not.
Read More: SEC Approves ProShares XRP Futures ETFs
Commissioner Crenshaws Sharp Dissent
A Tremendous Disservice to the Investing Public
Calling the settlement a hazardous precedent and a rollback of hard-won regulatory successes, Commissioner Caroline Crenshaw published an official statement dismissing it. Crenshaw claims the SECs choice to lower the financial penalty and remove the injunction indicates the agency is backing off holding crypto companies responsible.
This settlementundermines the courts function in interpreting our securities laws and does a great disservice to the investing public, Crenshaw said.
Her concerns go beyond the specific terms of the Ripple case. Crenshaw views the settlement as part of a larger trendan intentional weakening of the SECs crypto enforcement program. She emphasized that the deal erases investor protections that had already been validated in court, offering no guarantee that new regulations will replace them.
The Bigger Picture: A Shift in Crypto Policy
SECs Softer Stance Under Trump-Era Leadership
Crenshaw ascribes the shift in strategy to the return of Trump-era SEC leadership, which she claims has deprioritized crypto enforcement. The SEC has allegedly abandoned several continuous lawsuits against digital asset firms and moved toward a more lenient attitude since President Donald Trumps re-election.
The agencys continuous re-evaluation of its registration system for crypto-related securities backs this change. Crenshaw contends that although the SECs Crypto Task Force is supposed to generate new direction, this ambiguous future cannot excuse the neglect of present enforcement duties.
Even if the Crypto Task Force re-writes registration rules in the future, that does not change the fact that Ripple violated the existing laws, she warned.
She further criticized the lack of clarity about the SECs future crypto policies and the erosion of legal consistency within the agency itself. According to Crenshaw, SEC attorneys are now being instructed to contradict legal positions they took only months earlierundermining the agencys credibility both in court and with the public.
Ripples Legal Win and Market Reaction
While the settlement is controversial inside the SEC, it is widely viewed as a legal win for Ripple. By significantly reducing its financial liability and avoiding long-term restrictions, Ripple has preserved operational flexibility and regained control over millions in escrowed funds.
The XRP token responded positively to the news. XRPs value increased by more than 6.5% after the announcement, trading at $2.31 and market capitalization more than $132 billion. Ripples capacity to obtain good conditions in spite of the courts partial decision against it emphasizes both its legal tenacity and the changing political scene at the SEC.
What Comes Next?
Although the case is closed, the Ripple settlements consequences are far from finished. For industry watchers, this indicates the potential of a more forgiving regulatory age for crypto companies running in the United States. Crenshaws opposition, on the other hand, acts as a warning as well: legal uncertainty and compromised investor protections could characterize the path forward.
The Ripple case will probably be a major reference pointboth for what was enforced and what was left behindas regulatory bodies under pressure to modernize their approach to crypto assets.
The post SEC Commissioner Criticizes Ripple Settlement as Crypto Enforcement Weakens appeared first on CryptoNinjas.
Text source: CryptoNinjas
