U.S. Securities and Exchange Commission (SEC) Commissioner Caroline A. Crenshaw has voiced strong opposition to the SEC’s recent settlement with Ripple Labs.
The settlement resolves a lengthy legal battle, which began in December 2020, where the SEC sued Ripple for conducting an unregistered securities offering through the sale of XRP tokens.
The 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 previously restricted XRP sales.
Commissioner Crenshaw’s Concerns:
Judicial Undermining: Crenshaw argues that the settlement effectively nullifies the court’s injunction, which had prohibited Ripple from selling unregistered XRP. This could potentially allow Ripple to resume selling XRP without any further legal consequences.
Regulatory Vacuum: Crenshaw expresses concern that the deal signals the SEC’s shift away from its crypto enforcement efforts. She believes this shift could leave a regulatory gap in the cryptocurrency market, with no clear framework to replace the current enforcement approach.
Investor Risk: She emphasizes that the settlement raises more questions than it answers, especially in terms of investor protections and market clarity. Crenshaw warns that such actions could damage public trust in the SEC and its commitment to protecting investors.
In her dissent, Crenshaw criticizes the settlement for undermining legal precedents and regulatory enforcement, suggesting that it represents a broader attempt within the SEC to prioritize deregulation over effective law enforcement. She calls for courts to scrutinize the settlement closely, warning that the decision could diminish public confidence in the SEC’s role in regulating the financial market.
This opposition highlights a significant divide within the SEC, with Crenshaw expressing concern about the long-term implications for both the crypto industry and investor protections.
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