- Settlement dissolves $125M penalty, returns $75M to Ripple.
- The deal may erase the court’s prior ruling on XRP sales violations.
Commissioner Caroline Crenshaw has gone to the public to criticise the proposed settlement of the SEC-Ripple Labs case, which has caused internal divisions within the United States Securities and Exchange Commission. Ripple filed the agreement on May 8, 2025 to end a long legal fight that had gone on for four years over sales of its XRP token. According to Crenshaw, the settlement erodes investor protections and erodes the SEC’s regulatory authority.
In December 2020, SEC accused Ripple of raising $1.3 billion from unregistered XRP sales in contravention of securities laws. In 2024, a court ordered an injunction, which required Ripple to pay $125 million in penalties and limit the future sales of XRP. The revised settlement decreases the penalty to $50 million. It allocates a total of $75 million to Ripple from the escrow process and aims to lift the injunction, subject to a court order.
In his dissent issued on May 8, 2025, Crenshaw indicates his fears of the settlement’s implications. She said the agreement overrules the prior ruling by the court which ruled that Ripple was liable for illegal institutional XRP sales. By wiping away penalties and restrictions, the deal could enable Ripple to get back to doing the same things without consequences, she warned.
Settlement Details and Court Process
Judge Anañsa Torres of the New York court system received the letter outlining all the details of the arrangement. A request to return the $125 million held in trust is made by either the SEC or Ripple to the court. Half a billion dollars goes to the SEC, and the other half goes to Ripple. Both parties also agreed to withdraw their appeals. This was a sign that one of crypto’s most high-profile lawsuits has finally come to an end.
If approved, the settlement would end a case that started under former SEC Chair Jay Clayton. As part of the agreement, Judge Torres must issue a preliminary decision. If allowed, the parties will pursue a limited remand of the case to the Second Circuit Court of Appeals to finalize the agreement, according to legal reports from attorney James Filan.
Crenshaw stressed that the settlement does not support the findings of the court. She argued that nullifying the injunction and penalties does not honour the protections established in the 2024 ruling, which clarified XRP’s status as a security in some sales. This may establish a precedent that may curtail the SEC’s ability to regulate similar crypto cases, she said.
The SEC’s change of approach is brought about by a change of leadership. Under the auspices of a crypto-friendly chair, Paul Atkins, who was appointed in April 2025, the agency has discontinued a number of actions against digital asset firms. Crenshaw perceives this as a wider distancing from strong crypto oversight, as one wonders about the SEC’s dedication to its mandate.
Broader Implications for Crypto Regulation
Crenshaw’s critique extends beyond Ripple. She cautioned about the settlement adding to a “regulatory vacuum” in the crypto sector. Investor protections may have eroded until a complete regulatory system emerges, she explained, without clear enforcement. This concern is consistent with current arguments on a balance between innovation and the regulation of digital assets.
The Ripple case has gotten a lot of attention since its beginning. Programmatic XRP sales did not breach securities legislation, according to Judge Torres’s 2023 ruling, but institutional XRP sales did. Regardless of this dissimilarity, Crenshaw claimed that the settlement’s terms would invalidate the SEC’s precedent.
Other perspectives highlight the importance of the case. The Ripple’s settlement may have implications for other crypto lawsuits as the industry waits to see regulatory clarity. The SEC’s softer approach under new leadership is a political shift that affects enforcement strategy.
The court’s decision regarding the settlement is currently awaiting resolution.If the court approves, Ripple will pay a fraction of the original penalty, the court will lift the injunction, and the company will gain more freedom to operate. However, Crenshaw’s dissent implies the SEC’s internal divisions that may affect future crypto policies.
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