XRP News Today: SEC Commissioner Criticizes Ripple Settlement, Citing Weakened Investor Protections

Commissioner Caroline Crenshaw has publicly criticized the proposed settlement of the SEC-Ripple Labs case, highlighting internal divisions within the United States Securities and Exchange Commission. The settlement, filed on May 8, 2025, aims to conclude a four-year legal battle over the sales of Ripple's XRP token. According to Crenshaw, the settlement undermines investor protections and weakens the SEC’s regulatory authority.

In December 2020, the SEC accused Ripple of raising $1.3 billion from unregistered XRP sales, violating securities laws. In 2024, a court ordered an injunction requiring Ripple to pay $125 million in penalties and limit future XRP sales. The revised settlement reduces the penalty to $50 million, allocates $75 million to Ripple from the escrow process, and aims to lift the injunction, subject to a court order.

In her dissent issued on May 8, 2025, Crenshaw expressed concerns about the settlement’s implications. She argued that the agreement overrides the court’s prior ruling, which found Ripple liable for illegal institutional XRP sales. By removing penalties and restrictions, the deal could allow Ripple to resume similar activities without consequences, she warned.

Judge Anañsa Torres of the New York court system received the letter outlining the settlement details. Either the SEC or Ripple can request the return of the $125 million held in trust. Half a billion dollars would go to the SEC, and the other half to Ripple. Both parties agreed to withdraw their appeals, signaling the end of one of crypto’s most high-profile lawsuits.

If approved, the settlement would conclude a case that began under former SEC Chair Jay Clayton. Judge Torres must issue a preliminary decision as part of the agreement. If allowed, the parties will pursue a limited remand of the case to the Second Circuit Court of Appeals to finalize the agreement.

Crenshaw emphasized that the settlement does not support the court’s findings. She argued that nullifying the injunction and penalties does not honor the protections established in the 2024 ruling, which clarified XRP’s status as a security in some sales. This could set a precedent that limits the SEC’s ability to regulate similar crypto cases, she said.

The SEC’s change in approach is attributed to a change in leadership. Under the crypto-friendly chair, Paul Atkins, appointed in April 2025, the agency has discontinued several actions against digital asset firms. Crenshaw views this as a broader shift away from strong crypto oversight, raising questions about the SEC’s commitment to its mandate.

Crenshaw’s critique extends beyond Ripple. She warned that the settlement could contribute to a “regulatory vacuum” in the crypto sector, eroding investor protections until a comprehensive regulatory system is established. This concern aligns with current debates on balancing innovation and the regulation of digital assets.

The Ripple case has garnered significant attention since its inception. Judge Torres’s 2023 ruling stated that programmatic XRP sales did not violate securities legislation, but institutional XRP sales did. Despite this distinction, Crenshaw claimed that the settlement’s terms would invalidate the SEC’s precedent.

Other perspectives underscore the case’s importance. The Ripple settlement may have implications for other crypto lawsuits as the industry awaits regulatory clarity. The SEC’s softer approach under new leadership represents a political shift affecting enforcement strategy.

The court’s decision on the settlement is pending. If approved, Ripple will pay a fraction of the original penalty, the court will lift the injunction, and the company will gain more operational freedom. However, Crenshaw’s dissent highlights internal divisions within the SEC that may influence future crypto policies.