Report: SEC's Case Against Ripple May Be Over Soon

SEC v. Ripple could be over soon

Two well-placed sources tell me that the @SECGov vs. @Ripple case is in the process of wrapping up and could be over soon.

My understanding is that the delay in reaching an agreement is due to Ripple’s legal team negotiating more favorable terms regarding the August district court ruling, which imposed a $125M fine on the company and included a permanent injunction preventing the company from selling $XRP to institutional investors.

The argument, I’m told, is that if the new SEC leadership is wiping the enforcement slate clean for all previously-targeted crypto firms because it believes regulatory clarity will resolve the underlying issue, why should Ripple still be penalized?…

The SEC’s Retreat From Crypto Enforcement May Invite More Private Lawsuits

In the face of the SEC’s enforcement retreat, individuals and firms should be prepared for private plaintiffs to exploit the enforcement void. Historically, the private plaintiffs’ bar has stepped in to pursue litigation in the wake of decreased regulatory enforcement (or at least the perception of it), whether it be suits alleging violation of the federal antitrust laws or financial misconduct in violation of the securities laws following the 2008 crisis. Such private suits, often brought as class actions, can be an expensive nuisance for businesses and their founders (often named as defendants themselves) — even for those who prevail at an early stage.

In the digital asset space, private plaintiffs may still use the federal securities laws as a basis to bring a variety of allegations, including:

—selling unregistered securities;

—engaging in the sale of securities by means of a prospectus (e.g. white paper) containing untrue statements or omissions of material facts;

—securities fraud and other misconduct (e.g. rug pulls or pump-and-dump schemes);

—violations by individuals who have decision-making control over the seller, such as founders or company leadership

Private plaintiffs may also pursue alleged violations of state securities laws and other common law causes of action.

Resilience of the SEC In the Face of Political Changes

So when do you think these recommendations regarding the Securities and Exchange Commission (SEC) were made as part of a transition plan?

—“This report demonstrates how the staff and budget of the Securities and Exchange Commission can be reduced by approximately thirty (30) percent over a three year period without any compromise in the mission of the Agency.”

—“…the policy of the incoming SEC leadership should be to eliminate promptly those impediments to capital formation which are not essential to the mission of the Agency.”

—“The incoming administration should eliminate all but the very essential registration and continuing disclosure requirements.”

—“In virtually every area the leadership of the various divisions is unsatisfactory either because of philosophic incompatibilities or competence.”

Unless you guessed the year 1980, you are incorrect.

SEC Crackdown on Audit Misconduct Slowed in Biden’s Last Year

The SEC took far fewer, but higher value, enforcement actions against individuals and firms involved in financial reporting during the last year of the Biden administration than it had for the two years prior.

The agency took 45 actions related to potential accounting and auditing misconduct in fiscal year 2024 that ended Sept. 30, representing a 46% decline from the 83 actions the previous year, according to a Cornerstone Research report released Wednesday. Simultaneously, the Wall Street regulator’s monetary penalties in fiscal year 2024 reached their highest level since 2021, totaling more than $770 million.

Federal Worker Layoffs Climb Toward 250,000 as Deadline Looms

The Trump administration’s push to drastically shrink the federal government shifts to a new gear Thursday, when agencies face a deadline to submit plans for large-scale layoffs and budget cuts.

With them, the list of government job cuts that for weeks had been measured in the tens of thousands — and included retirements, deferred resignations, and selective firings — is expected to reach into the hundreds of thousands.

The prospective plans also will bring more clearly into focus how the downsizing could impact government services and reshape everything from the broader US economy to local communities.