SEC Commissioner Criticizes Ripple Settlement, Cites 75% Million Return

SEC Commissioner Caroline Crenshaw has publicly criticized the Commission’s settlement with Ripple, asserting that it represents a significant setback for retail investors. The Ripple case has been a focal point in the crypto community, symbolizing the extent of regulatory overreach during the Gensler era. The settlement, which includes the return of $75 million previously collected as a fee, has sparked controversy within the Commission.

Crenshaw’s dissenting opinion was expressed in a scathing open letter. She argued that the settlement undermines the SEC’s enforcement capabilities and creates uncertainty for the crypto industry. Crenshaw claimed that if Ripple were to sell unregistered XRP tokens to institutional investors in defiance of the court’s order, the SEC would take no action. This stance, she believes, does a “tremendous disservice” to retail investors who rely on the SEC for protection.

Last December, political maneuvering from the Senate’s pro-crypto faction thwarted Crenshaw’s efforts to secure another term at the SEC. Since then, she has continued to criticize the Commission’s pro-crypto shift. Her latest letter is one of several such statements, and she did not mince words in her criticism. Crenshaw’s argument centers on the idea that the SEC has not fully restructured US crypto policy, and thus, the rules that were in place at the time of Ripple’s violations still stand.

Crenshaw further claimed that the SEC’s policy favors the crypto industry at the expense of its own integrity. The Commission’s lawyers are publicly arguing against positions they held less than six months ago, creating chaos and uncertainty. This uncertainty, she fears, will disproportionately harm retail investors. Crenshaw’s concerns echo those of Senator Elizabeth Warren, who has also voiced worries about the Commission’s political independence.

During the Gensler era, federal regulators’ reputation in the crypto community suffered due to clear examples of overreach. Now that the industry has unprecedented political influence, it might overreact in a few ways. Legal clarity and a laissez-faire outlook will help businesses, but they also need credible regulators. Crenshaw’s dissent highlights the ongoing debate within the SEC and the broader crypto community about the appropriate role of regulation in this rapidly evolving sector.