Trump Chooses Former SEC Chair Behind XRP Lawsuit as New SDNY Attorney

Former SEC Chair Jay Clayton, designated by Trump as the new U.S. Attorney for the Southern District of New York (SDNY), is known for initiating the SEC’s lawsuit against Ripple. Despite his promise to halt crypto enforcement at the SDNY, he played a pivotal role in one of the most significant cases against the cryptocurrency.

Jay Clayton’s Role in the Ripple Case

Trump has pledged to foster a more crypto-friendly regulatory environment and has instructed his team to scale back enforcement actions involving digital assets. In a notable move, he nominated Jay Clayton for the role of U.S. Attorney back in November, and Clayton has now been officially appointed. However, there is a notable conflict as he was the one who filed the SEC’s lawsuit against Ripple.

The case, SEC vs. Ripple, has emerged as a seminal legal battle during the Gensler administration, and Clayton was its architect. Having led the SEC from 2017 to 2020, he resigned just after filing the lawsuit on December 22, the day after making it public, which Ripple’s team described as a “parting shot.”

Fast forward a few years, and Clayton appears to have changed his stance. After his nomination last November, his spokesperson communicated that the SDNY would prioritize reducing enforcement actions against cryptocurrencies.

Recently, Clayton has made public remarks criticizing the current SEC chair, Gary Gensler, for his aggressive enforcement strategy, which has caused frustration for Ripple’s CEO, Brad Garlinghouse.

October 28, 2023

Main Issues Surrounding His Appointment

Ripple has yet to issue a statement regarding Clayton’s appointment, but there is likely to be tension given his background. Normally, Senate confirmation processes are rigorous.

Trump had offered the SEC Chair position to Paul Atkins earlier, which took considerable time to finalize. However, he appears to be taking a different approach with Clayton, appointing him as Acting U.S. Attorney in the SDNY with the expectation of making that role permanent without the usual Senate confirmation.

Related: $2.3 Trillion Liquidity Shock: Franklin Templeton Says XRP Is Next in Line for Massive Inflows

Even if Senate Majority Leader Chuck Schumer blocks his confirmation, judges within the SDNY can still appoint Clayton after a period of 120 days. This scenario exemplifies the increasing political influence of the cryptocurrency sector, but it also raises fundamental questions: How reliable are former adversaries in the crypto landscape? How many current “friends” in this industry could easily pivot to support stricter regulations in the future?