U.S. Securities and Exchange Commission (SEC) Commissioner Caroline A. Crenshaw has publicly opposed the agency’s settlement with Ripple Labs. She warns that it undermines investor protections and weakens the SEC’s crypto enforcement efforts.
The controversy stems from the long-standing legal battle that began in December 2020, when the SEC sued Ripple for raising capital through the sale of XRP tokens without registering them as securities, allegedly violating Section 5 of the Securities Act of 1933.
A court had partially ruled against Ripple, declaring that its institutional sales of XRP were unregistered securities offerings, while other secondary sales were not.
The newly announced settlement requires Ripple to pay over $125 million in penalties but also returns $75 million in escrowed funds to the company and vacates the injunction that restricted future XRP sales.
Commissioner Crenshaw, in a sharply worded dissent , stated that the agreement “razes” both the civil penalty and the injunction, effectively voiding the impact of the court’s ruling.
Crenshaw’s opposition focused on three key concerns:
- Judicial Undermining: The settlement nullifies the court’s injunction, potentially allowing Ripple to sell unregistered XRP again without consequence.
- Regulatory Vacuum: Crenshaw warned the deal represents a broader shift by the SEC away from crypto enforcement, with no clear framework to replace it.
- Investor Risk: She emphasized the deal raises more questions than it answers, particularly regarding investor protections and market clarity.
Her dissent also highlighted fears that the SEC is attempting to “gut its own enforcement program from the inside out,” prioritizing programmatic deregulation over legal precedent. Crenshaw urged the courts to scrutinize the settlement, warning that such decisions could erode public confidence in the SEC’s integrity and mandate.
