SEC Commissioner Calls Out Ripple Settlement, Cautions About Diminished Crypto Regulation

Commissioner Caroline Crenshaw of the US Securities and Exchange Commission (SEC) has voiced her strong disapproval of the agency’s recent settlement with Ripple Labs, stating that it diminishes regulatory authority and inadequately safeguards investors.

In her remarks on May 8, Crenshaw emphasized that the agreement diminishes both the court’s and the SEC’s power to uphold securities laws. She cautioned that this settlement is indicative of a larger trend away from effective regulation in the cryptocurrency space.

The Commissioner expressed her thoughts by saying:

“The settlement contributes to a string of dismissals that collectively undermine our lawyers’ credibility in court, who are being asked to adopt legal stances now that contradict those taken just months prior. This also defies the principle of consistency in government affairs.”

Recently, the financial watchdog and Ripple reached an accord that settles the SEC’s legal action against Ripple and its co-founders, Brad Garlinghouse and Christian Larsen.

As part of this agreement, the SEC proposed that a district court eliminate a previous injunction against Ripple. Additionally, the company will regain access to over $75 million that had been placed in escrow.

### Crenshaw Critiques the SEC

Despite this development, Crenshaw contended that the agreement is excessively lenient. She noted that by eliminating previous court-imposed penalties, the settlement prevents the SEC from taking any future enforcement actions related to XRP transactions.

She believes this weakens legal precedents and restricts the agency’s capacity to handle similar cases in the future. She remarked:

“If Ripple were to sell unregistered XRP tokens to institutional investors tomorrow—flagrantly disregarding the court’s directive—this Commission would take no action. There would be no enforcement of the law. The extensive efforts of the court in this matter would become meaningless, effectively nullifying the court’s ruling.”

Crenshaw further observed that this settlement exemplifies a concerning trend within the SEC, leaning towards a diminished focus on enforcement in the cryptocurrency sector.

She expressed her apprehension that this approach sends mixed messages to both the public and the industry, raising numerous unanswered questions.

She inquired:

“Does the resolution imply that we concur with the court’s decision? What is the legal implications of the ruling? How can we guarantee that investors receive the essential information to which they are entitled under the law?”

Crenshaw emphasized that agreements like this carry the risk of generating confusion in the market. She cautioned that such measures leave investors exposed and fail to deliver the clarity necessary for informed decision-making.

Ultimately, she remarked that the settlement brings forth more questions than solutions, especially regarding consistency in enforcement and the protection of investors.