'A tremendous disservice': SEC Commissioner Crenshaw blasts agency's settlement with Ripple in public dissent

SEC Commissioner Caroline Crenshaw blasted a settlement agreement with Ripple and two of its executives, filed by the agency with the district court on Thursday.

The agency's deal with Ripple, CEO Brad Garlinghouse, and Executive Chairman Chris Larsen could finally resolve its long-running civil enforcement case. Under the agreement, the SEC and Ripple will ask the court to dissolve the injunction from the August 2024 judgment and release the $125 million civil penalty held in escrow — $50 million of which would go to the SEC, with the remainder returned to Ripple. If the court agrees, both sides will dismiss their appeals. However, the SEC emphasized that the settlement reflects a strategic regulatory shift rather than a judgment on the case's merits.

"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," Crenshaw wrote in a public dissent of the agreement.

Crenshaw, a Democrat, still serves as an SEC commissioner despite her term officially ending in June 2024. She was appointed to one of the two Democratic seats on the five-member bipartisan commission in 2020 by President Donald Trump and later renominated by President Joe Biden. Her latest renomination was blocked by Senate opposition — largely due to her tough stance on crypto — and a planned vote on her reappointment was canceled in December. Under SEC rules, she may remain in the role for up to 18 months after her term expires if no successor is confirmed, and is, therefore, expected to leave the agency by the end of the year.

"This is not a settlement I can support," Crenshaw added, arguing it subverts the court's prior ruling by erasing both the civil penalty and injunction, effectively nullifying regulatory action if Ripple repeats its violations. She warned that the deal weakens the SEC’s credibility and enforcement integrity by abandoning existing legal standards in favor of an undefined future framework from the new Crypto Task Force, led by Republican Commissioner Hester Peirce. Crenshaw also criticized the settlement for creating a "regulatory vacuum" and failing to serve the interests of investors, leaving key legal questions unanswered.

Ultimately, Crenshaw said she dissented out of confidence in the SEC's original legal arguments, warning the regulator is backing away from a strong case to avoid a ruling that could "undermine the agency's new apparent mission of dismantling our crypto enforcement program and eroding investor protections."

How we got here

The SEC's case against Ripple has been going on for years. In 2020, the SEC accused the firm of raising $1.3 billion through the sale of XRP, claiming it was an unregistered security. Then in July 2023, U.S. District Court for the Southern District of New York Judge Analisa Torres ruled that some of Ripple's sales, called programmatic, of XRP did not violate securities laws because of a blind bid process in place for them. However, Torres also ruled that investment contracts involving direct XRP sales to institutional investors constituted unregistered securities offerings and later ordered Ripple to pay a $125 million civil penalty. Both parties appealed the ruling.

However, since former Chair Gary Gensler's departure in January and the start of pro-crypo President Donald Trump's second term, the SEC has taken a friendlier stance toward the industry — rolling back guidance, launching the new Crypto Task Force, and signaling a shift from Gensler's enforcement-heavy approach.

In March, Garlinghouse said that his company's legal battle with the SEC had effectively ended . "It seems very clear to me that this case was doomed from the start," he wrote at the time. "In so many ways, it was the first major shot fired in the war on crypto."

Ripple Chief Legal Officer Stuart Alderoty subsequently outlined an agreement-in-principle that the SEC would retain $50 million of the fine held in an interest-bearing escrow account, while the remaining $75 million would be returned to Ripple, pending the commissioners' approval. Last month, Ripple and the SEC then filed a joint motion to suspend their appeals to pursue this "negotiated resolution." With approval granted and the agreement officially filed, the parties now seek an indicative ruling from the district court.

The agency has also dismissed its cases against Coinbase and Kraken, among others, in recent months.