XRP Settlement Criticized by SEC Official

XRP has once again taken center stage in regulatory debates, following a recent settlement between Ripple and the U.S. Securities and Exchange Commission (SEC) that’s drawing criticism from within the agency itself. Commissioner Caroline Crenshaw has voiced strong disapproval of the terms agreed upon, sparking new controversy around crypto enforcement.

Crenshaw, known for her strict stance on cryptocurrency oversight, issued a dissent in which she denounced the SEC’s decision to settle with Ripple. She argued that this arrangement not only weakens investor protections but also counters the commission’s own legal objectives. According to Crenshaw, the revised terms favor Ripple disproportionately and dilute the court’s original judgment.

The commissioner emphasized that allowing Ripple to pay a reduced penalty sends a disturbing message. Initially, Ripple faced a $125 million fine after being found liable for violating securities laws. However, the updated agreement cuts that amount significantly, requiring the blockchain firm to pay just $50 million. In conjunction with the reduced fine, an injunction that previously limited Ripple’s operations has also been lifted.

Crenshaw’s core argument centers around concerns that the SEC is now stepping back from its enforcement duties. She noted that the decision could be interpreted as a signal of reluctance from the agency to pursue a full legal victory. “Our agency is, I fear, worried that the appellate court would issue a sound ruling that agreed with the legal arguments already laid out by the Commission,” she remarked. This fear, she claimed, may have influenced the lenient outcome.

As of now, the case remains in the Second Circuit Court of Appeals. Before it can be concluded, Judge Analisa Torres must still confirm the amended settlement. The summary judgment previously issued will remain intact, but once both Ripple and the SEC formally drop their appeals, the legal conflict will officially end. That said, Crenshaw warned that without continuous enforcement, Ripple could theoretically resume selling unregistered XRP to institutional investors, undermining the spirit of regulatory compliance.

This disagreement has sparked broader debates about the SEC’s future approach to digital asset regulation. Crenshaw’s dissent has raised questions about the consistency and strength of regulatory frameworks in the crypto space. In her view, resolving high-stakes cases without firm penalties creates a precedent that favors corporations at the expense of market integrity.

Additionally, Crenshaw’s critique hints at a possible shift in the SEC’s internal dynamics. She suggested that the current leadership might be pulling back from aggressive crypto enforcement, possibly due to anticipation of judicial pushback. If appellate courts issue rulings critical of the SEC’s strategies, it could set new precedents that limit the agency’s authority in future digital asset cases.

For Ripple and its native token XRP, the modified settlement offers a welcome reprieve, clearing some of the regulatory clouds that have long hung over the company. However, the criticism from within the SEC suggests that regulatory clarity is still a distant goal. The digital asset sector, with XRP at the forefront, continues to grapple with uncertainty derived from a lack of unified regulatory consensus.

As institutions and individual investors watch closely, this development in the Ripple case highlights the growing tension between fostering innovation in the blockchain ecosystem and enforcing transparent, consistent rules. For XRP holders and crypto advocates, the outcome may feel like progress. But for regulators like Crenshaw, it’s a missed opportunity to reinforce accountability in a rapidly evolving market.

Related: Expert Advice: Sell XRP If You’re Confused

The Ripple-SEC case continues to be a touchstone in the broader conversation about crypto regulation. The final resolution, pending judicial approval, may formally end the lawsuit but will likely leave lasting effects on how digital assets like XRP are treated under U.S. law.