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A crypto-sceptical commissioner of the SEC blew up her agent in his settlement letter that could eventually end the legal legend of the ripple effect.
The SEC and Ripple filed a joint settlement letter in a New York court asking for the dissolution of the injunction against Ripple in August 2024, of which $75 million of the $125 million civil fine held in custody, will be returned to cryptocurrency companies, according to the SEC’s May 8 statement.
SEC Commissioner Caroline Crenshaw slammed the pending agreement in a May 8 statement, saying it would undermine the regulator’s ability to keep cryptocurrency companies consistent and undermine court rulings.
“This settlement, as well as the procedural dismantling of the SEC crypto-enforcement program, has done a great job of harming the investing public and undermining the role of the court in interpreting our securities laws,” she said.
“At the same time, the settlement has joined a series of dismissals that uniformly erode the credibility of our attorneys in court, who are being asked today to be contrary to the legal position taken several months ago.”
Under the Trump administration, the Securities and Exchange Commission has been gradually withdrawing its tough stance against Gary Gensler, a crypto company forged by Crypto, dismissing an increasing number of law enforcement actions against crypto companies.
Meanwhile, Crenshaw argues that if Judge Torres accepts the settlement, it will remove “the investor protection we have won” and leave a “regulatory vacuum” until crypto task forces hammer the regulatory framework.
“The solution is not in the best interest of the investors and markets our agency wants to serve and protect. It creates more questions than answers.”
Last August, a judge ordered Ripple to pay a $125 million fine after ruling the company’s XRP (XRP) token and was covered by securities laws when it was sold to institutional investors.
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Former federal prosecutor James Filan said that although the SEC and Ripple have agreed to a settlement, it is still not a deal, as long-running legal legends can come up with several steps.
First, Judge Torres needs to provide an indicative ruling, Filan said in his May 8 analysis of X.
According to Philan, if Torres provides an indicative ruling, the SEC and Ripple will require the Second Circuit Court of Appeals to sign a limited remand to Judge Torres, which, if granted, will result in another motion to file a motion for the settlement of the agreement.
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“After dissolving the injunction and allocating funds, the SEC and Ripple will ask the Court of Appeal to dismiss the SEC’s appeal and Ripple’s cross-claim. It will then end,” he said.
The SEC initially launched a legal lawsuit against Ripple Labs in December 2020, accusing the company of illegally selling its tokens as unregistered security.
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