A crypto-skeptical commissioner at the US Securities and Exchange Commission has blasted her agency over its settlement letter that could finally end the Ripple legal saga.
The SEC and Ripple filed a joint settlement letter in a New York court asking for the August 2024 injunction against Ripple to be dissolved and $75 million of the $125 million in civil penalties held in escrow to be returned to the crypto firm, according to a May 8 statement from the SEC.
SEC Commissioner Caroline Crenshaw blasted the pending deal in a May 8 statement, saying it would damage the regulators’ ability to keep crypto firms in line and undermine the court’s ruling.
“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,” she said.
“In the meantime, the settlement joins a line of dismissals that collectively erode the credibility of our lawyers in court who are being asked to take legal positions today contrary to the ones taken just months ago.”
At the same time, Crenshaw argues that if Judge Torres accepts the settlement, it would erase “the investor protections we already won” and leave a “regulatory vacuum,” until the crypto task force hammers out a regulatory framework.
“The settlement is not in the best interests of the investors and markets that our agency is tasked with serving and protecting. It creates more questions than answers.”
In August last year, a Judge ordered Ripple to pay $125 million in penalties after ruling the firm’s XRP (XRP) token was covered by securities laws when sold to institutional investors.
What’s next for the Ripple case? It’s not over yet
While the SEC and Ripple have agreed to a settlement, it’s still not a done deal, according to ex-federal prosecutor James Filan, because there are several steps before the long-running legal saga can conclude.
For a start, Judge Torres needs to provide an indicative ruling if she agrees to the settlement letter, Filan said in a May 8 analysis on X.
If Torres provides an indicative ruling, the SEC and Ripple will ask the Second Circuit Court of Appeals for a limited remand back to Judge Torres, which, if granted, will result in another motion being filed for the agreed settlement, according to Filan.
“After the injunction is dissolved and the funds distributed, the SEC and Ripple will ask the Court of Appeals to dismiss the SEC’s appeal and Ripple’s cross-appeal. Then it will be over,” he said.
The SEC initially launched legal action against Ripple Labs in December 2020, accusing the firm of illegally selling its token as an unregistered security.
WazirX has been trying to get a restructuring plan through the Singapore High Court to start returning funds to users impacted by the $234 million hack in 2024.
“It’s an interesting moment,” was how one government source described the High Court ruling that will force an Essex hotel to be emptied of asylum seekers within weeks.
That may prove to be the understatement of the summer.
For clues as to why, just take a glance at what the Home Office’s own lawyer told the court on Tuesday.
Granting the injunction “runs the risk of acting as an impetus for further violent protests”, the barrister said – pointing out that similar legal claims by other councils would “aggravate pressures on the asylum estate”.
Right on cue and just hours after the ruling came in, Broxbourne Council – over the border in Hertfordshire – posted online that it was urgently seeking legal advice with a view to taking similar court action.
The risks here are clear.
Image: Police officers ahead of a demonstration outside The Bell Hotel. Pic: PA
Recent figures show just over 30,000 asylum seekers being housed in hotels across the country.
If they start to empty out following a string of court claims, the Home Office will struggle to find alternative options.
After all, they are only in hotels because of a lack of other types of accommodation.
There are several caveats though.
This is just an interim injunction that will be heard in full in the autumn.
So the court could swing back in favour of the hotel chain – and by extension the Home Office.
Image: Protesters in Epping on 8 August. Pic: Reuters
We have been here before
Remember, this isn’t the first legal claim of this kind.
Other councils have tried to leverage the power of the courts to shut down asylum hotels, with varying degrees of success.
In 2022, Ipswich Borough Council failed to get an extension to an interim injunction to prevent migrants being sent to a Novotel in the town.
As in Epping, lawyers argued there had been a change in use under planning rules.
Image: The hotel has been the scene of regular protests. Pic: PA
But the judge eventually decided that the legal duty the Home Office has to provide accommodation for asylum seekers was more important.
So there may not be a direct read across from this case to other councils.
Home Office officials are emphasising this injunction was won on the grounds of planning laws rather than national issues such as public order, and as such, each case will be different.
Spotify
This content is provided by Spotify, which may be using cookies and other technologies.
To show you this content, we need your permission to use cookies.
You can use the buttons below to amend your preferences to enable Spotify cookies or to allow those cookies just once.
You can change your settings at any time via the Privacy Options.
Unfortunately we have been unable to verify if you have consented to Spotify cookies.
To view this content you can use the button below to allow Spotify cookies for this session only.
But government sources also smell dirty tricks from Epping Council and are suggesting that the Tory-led local authority made the legal claim for political reasons.
Pointing to the presence of several prominent Tory MPs in the Essex area – as well as the threat posed by Reform in the county – the question being posed is why this legal challenge was not brought when asylum seekers first started being sent to the hotel in 2020 during the Conservatives‘ time in government.
Epping Council would no doubt reject that and say recent disorder prompted them to act.
But that won’t stop the Tories and Reform of seizing on this as evidence of a failing approach from Labour.
So there are political risks for the government, yes, but it’s the practicalities that could flow from this ruling that pose the bigger danger.