An accord has been reached between Ripple Labs and the U.S. SEC that, upon approval by the New York Court, will bring a close to their extensive four-year legal conflict.
The resolution has prompted strong objections from SEC Commissioner Caroline Crenshaw, who characterized the settlement as detrimental to both investor safeguards and the integrity of the legal system.
Terms of the $50 Million Agreement
A jointly filed settlement letter on Thursday reveals that both Ripple and the SEC are petitioning for the nullification of the August 2024 injunction against the blockchain payments company.
The agreement also mandates that Ripple, alongside its Chief Executive Officer Brad Garlinghouse and Executive Chairman Chris Larsen, will remit a $50 million penalty.
Consequently, the outstanding $75 million from the initial $125 million civil penalty, currently held in an escrow account, will be reimbursed to Ripple.
The final endorsement of this negotiated settlement is contingent upon the decision of District Court Judge Analisa Torres.
This resolution marks a significant departure from the SEC’s initial stance under its previous Chair, Gary Gensler. During the Biden administration, Gensler’s SEC pursued an aggressive enforcement strategy against major cryptocurrency entities, originally demanding a staggering $2 billion fine from Ripple. T
his was later revised when, in the preceding year, Judge Torres imposed a $125 million fine on Ripple.
The court determined that Ripple had violated securities regulations in its sales of the XRP token to institutional investors but had not breached federal securities laws when making XRP available on digital asset exchanges for retail consumers.
Since President Donald Trump assumed office, the SEC, under fresh leadership, has notably tempered its stringent posture towards the digital currency sector, resulting in the termination of several enforcement actions and investigations.
President Trump has publicly articulated his ambition to establish the U.S. as the “crypto capital of the world.”
Commissioner Crenshaw’s Condemnation of the Ripple Accord
SEC Commissioner Caroline Crenshaw has openly voiced her disapproval of the agency’s proposed settlement with Ripple.
In a statement issued on May 8th, she cautioned that the agreement severely compromises the regulator’s capacity to effectively oversee cryptocurrency firms and subverts the authority of the court’s previous determinations.
“This settlement, alongside the programmatic disassembly of the SEC’s crypto enforcement program, does a tremendous disservice to the investing public and undermines the court’s role in interpreting our securities laws,” she asserted.
It is pertinent to note that while Commissioner Crenshaw’s official term concluded in 2024, SEC regulations permit an 18-month continuation of service post-expiration.
Crenshaw further warned that the settlement erodes the SEC’s credibility, alleging that the agency’s legal team is “being asked to take legal positions today contrary to the ones taken just months ago.”
The commissioner also argued that if Judge Torres ratifies the settlement, it would effectively dismantle “the investor protections we already won” and engender a “regulatory vacuum,” pending the formulation of a lucid regulatory framework by the crypto task force.
“The settlement is not in the best interests of the investors and markets that our agency is tasked with serving and protecting.
It creates more questions than answers,” she concluded.
Also Read: SEC Action Concludes With $75M Recovery for Ripple
