Will the SEC Drop Its Case Against Ripple?

The SEC just dropped its lawsuit against Hex founder Richard Heart, and the crypto community is buzzing. Could this be a sign that the Ripple vs. SEC case might finally come to an end? With the regulator stepping back from multiple crypto lawsuits, optimism is growing, and XRP lawyer John Deaton is making a strong push to get the Ripple case dismissed.

Let’s break it all down.

Deaton Calls for Ripple Case Dismissal

Deaton has urged SEC officials Hester Peirce and Mark Uyeda, along with crypto advocates David Sacks and Bo Hines, to help dismiss the case against Ripple. In a post on X, he wrote:

His call for action comes as the SEC backs away from several lawsuits, fueling speculation about its changing approach to crypto enforcement.

Is the SEC Losing Control?

The SEC’s decision to drop multiple lawsuits has sparked mixed reactions. While many in the crypto industry see this as a victory, former SEC official John Reed Stark has warned that it could be a bad sign for the agency. He suggests that backing down from enforcement could weaken the SEC’s ability to regulate the sector effectively.

Since the start of Donald Trump’s second term, the crypto industry has seen several legal victories. The SEC has dropped or closed six cases and asked courts to pause two more. With crypto playing a key role in the 2024 election, these developments suggest a shift in the regulatory approach—though how crypto will be governed remains unclear.

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SEC’s Changing Approach to Crypto

In the past week, the SEC has dropped its lawsuit against Coinbase, paused cases against Binance and Tron, and told platforms like ConsenSys, OpenSea, Robinhood, Uniswap, and Gemini that their investigations have been closed.

This shift follows SEC Commissioner hester peirce hester peirce  
 
Hester Peirce of the Securities and Exchange Commission, often known as “Crypto Mom,” is one of the most outspoken supporters of cryptocurrency at the government level in the United States. Prior to joining the Securities and Exchange Commission, she worked in a variety of roles evaluating and formulating financial regulations, having graduated from Yale Law School. She worked at George Mason University’s Mercatus Center, a libertarian think tank, most recently before becoming commissioner, where she produced, among other things, critiques of legislation like the Dodd-Frank Act.
 
She, often known as “Crypto Mom,” is a member of the Securities and Exchange Commission. She was born in Ohio and graduated from Yale Law School. Prior to joining the Securities and Exchange Commission, she worked in a variety of capacities evaluating and creating financial regulations. She worked at George Mason University’s Mercatus Center, a libertarian-leaning think tank, most recently before becoming commissioner, where she produced, among other things, critiques of legislation like the Dodd-Frank Act.
 
As chairman Jay Clayton steps out and a Joe Biden nominee takes his place, Republican Peirce will find herself in the minority. Clayton, on the other hand, was not particularly forward-thinking when it came to digital assets. President Biden has declared his intention to select Gary Gensler, a crypto expert who would presumably be more prepared to deal with Peirce than Clayton was.
 
The SEC’s approval of initial public offerings for crypto businesses like Coinbase, the first U.S.-authorized Bitcoin ETF, and, of course, the ICO safe harbour are all obvious targets for Peirce. We won’t know what Peirce thinks about the SEC’s pursuit of Ripple until after the fact, per SEC protocol, but the outcome of that case will almost certainly serve as a springboard for more clarity.
 
Peirce told guests at the Crypto Finance Conference in January that the future SEC chairman’s priority should be supporting innovation and giving regulatory clarity: “We need to embrace innovation and figure out how to create a regulatory framework that encourages it, which, in our field, I believe means providing clarity.” EntrepreneurInvestorFinanceCrypto and Blockchain Expert ’s announcement of a new crypto task force, where she invited public input on how securities laws should apply to different types of digital assets. The SEC also withdrew Staff Accounting Bulletin 121, a widely criticized rule that affected crypto firms.

A New Strategy Under Acting Chair Uyeda

Although some investigations are still ongoing, it’s clear that the SEC is taking a different approach under Acting Chair Mark Uyeda. Unlike former Chair Gary Gensler’s aggressive enforcement strategy, Peirce has emphasized the need for clear policies to guide the industry, rather than relying on lawsuits to set the rules.