SEC Commissioner Crenshaw Criticizes Ripple Settlement and Agency’s New Direction

• Ripple will pay $50M in a settlement; $75M in penalties will be returned.
• Crenshaw says the deal erases prior court victories for investor protections.
• The SEC is scaling back crypto enforcement actions under Trump’s administration.

SEC Commissioner Caroline Crenshaw has raised concerns over the agency’s recent settlement with Ripple Labs. According to a May 8 statement , Crenshaw warned that the deal could hurt legal enforcement and weaken protections for crypto investors. The case, initially filed in 2020, accused Ripple of selling XRP tokens without reporting them as securities. The lawsuit observed a key part of the SEC’s crypto oversight campaign , especially during former Chair Gary Gensler’s tenure.

Legal Action and Court Rulings

The SEC first brought the case against Ripple in December 2020, accusing it of unregistered institutional token sales. While the agency sought $2 billion in penalties, a federal judge ruled in August 2023 that XRP sales to institutional investors violated securities laws. However, the court found that programmatic sales to retail investors did not breach the law. 

The court ordered Ripple to pay $125 million in penalties and issued an injunction restricting further violations. On May 8, the SEC and Ripple filed a joint letter requesting to dissolve the 2024 injunction. The agreement included a $50 million payment from Ripple and its executives Brad Garlinghouse and Chris Larsen.

Additionally, over $75 million from the previous penalty, held in escrow, would be returned to Ripple. The agency also requested that Judge Torres approve the deal and begin the legal process to conclude the case. Once the injunction is lifted and funds returned, the SEC and Ripple will jointly ask the appeals court to dismiss pending appeals.

Commissioner Crenshaw’s Objections

Commissioner Crenshaw issued a formal statement criticizing the deal and the agency’s current approach to crypto regulation. She stated that the settlement weakens previously won investor protections and lacks a solid regulatory foundation. Crenshaw also claimed that the deal could damage the credibility of SEC lawyers by reversing earlier legal positions.

She pointed to a growing number of dismissed crypto cases under the current administration as evidence of a broader shift. Crenshaw’s remarks follow several dropped enforcement actions against digital asset firms since Donald Trump returned to office. She said the SEC’s crypto task force was being scaled back, creating a regulatory gap. 
Crenshaw warned that replacing clear court rulings with uncertain future regulations could leave markets without proper oversight. She emphasized that the agency must uphold the laws already validated in court. The settlement awaits a final court ruling from Judge Torres before the case can be officially closed.