SEC's Annual Crypto Enforcement Report Sparks Controversy Among XRP Community
Critics of the SEC Ignite Controversy over the Agency's Anniversary Report on XRP Matters
The United States Securities and Exchange Commission (SEC) recently released its annual enforcement report for Fiscal Year (FY) 2023, showcasing a whopping 784 enforcement actions, $4.9 billion in financial remedies, and $1 billion returned to harmed investors. Though impressive, this report has ignited a passionate response from the XRP community.
Gary Gensler, SEC Chair, highlighted the division's pivotal role in investor protection, declaring, "The Enforcement Division's work as a cop on the beat is crucial to the investing public. FY 2023's results underscore the Division's effectiveness in pursuing wrongdoers and upholding the law."
XRP Community Pushes Back
In stark contrast, prominent figures within the XRP legal community have challenged Gensler's leadership. John E. Deaton, representing the XRP community in the Ripple vs. SEC case, bluntly questioned, "Want to genuinely protect investors? Quit then."
Bill Morgan, an Australian lawyer associated with the XRP community, scrutinized the SEC's effectiveness, particularly in the LBRY case, asking, "How much did you reap from the LBRY case? Absolutely nothing so far because you practically bankrupted LBRY. How much did your taxpayer-funded legal fees cost? A lot. Whom did you protect? Nobody. Whom did you hurt? Investors. What worthwhile outcome did you achieve from the case? Nothing? What was the opportunity cost? Not using those resources to prevent real scams like FTX."
XRP Price Drops Amidst Market Chaos
Amusingly absent from the SEC's report was any mention of the Ripple case concerning XRP's classification as a security. This is due to the pending remedy phase for the case and the recent setting of a timetable, as reported by Bitcoinist.
Fred Rispoli, founder of HODL Law and a pro-XRP lawyer, recently weighed in on the SEC vs. Ripple case, suggesting that the SEC may have deliberately avoided including it in their report, stating, "SEC vs. Ripple. The remedies-related discovery schedule is set. There's no chance of a 2nd Cir. ruling on an appeal by either party (if one is ever filed) before mid-2026. Think of everything that will happen between now and then. Game Over, SEC. You lost."
SEC Enforcement Report 2023: A Comprehensive Approach
The SEC's Fiscal Year 2023 enforcement report illustrates a proactive stance regarding the crypto asset securities sector. This year's actions addressed a range of issues, including large-scale frauds, unregistered offerings, and noncompliance among crypto-asset intermediaries.
High-profile cases against massive crypto frauds include charges against Terraform Labs and its founder Do Kwon, Richard Heart and his controlled entities Hex, PulseChain, and PulseX, and the case of FTX CEO Samuel Bankman-Fried and other FTX executives.
The report also emphasized the SEC's efforts to target unregistered securities offerings in the crypto sector. Key targets were Genesis/Gemini, Celsius, Kraken, and Nexo, with settlements reached in some of these cases, including a $30 million fine for Kraken and a $22.5 million penalty for Nexo.
The enforcement report further outlines the SEC's increased focus on regulating crypto asset intermediaries, bringing charges against entities like Beaxy, Bittrex, Binance, and Coinbase to ensure compliance with securities laws. Moreover, the regulatory scrutiny parallels the attention given to emerging industries like Nebraska sports betting, where evolving state-level frameworks respond to growing public interest and technological innovation.
A significant focus of the SEC's enforcement was illegal celebrity touting of crypto asset securities. Influencers and celebrities like Paul Pierce, Kim Kardashian, Lindsay Lohan, Jake Paul, and others were charged for failing to disclose compensation received for promotions.
The report also mentioned the SEC's victory in the LBRY case, with a federal court upholding the SEC's position that LBRY, Inc. had violated federal securities laws.
Sources:
- Cointelegraph
- SEC Press Release
- BloombergNote: The information provided may not represent the latest developments in the above-mentioned subjects as it was compiledprior to March 2025.
Additional Context:
Reports emerged in early March 2025 that the SEC vs. Ripple case had come to an end with the SEC dropping its final appeal[1][2]. This decision concluded a lengthy legal battle over whether XRP should be classified as a security. The resolution carried significant implications for Ripple and the broader cryptocurrency industry, providing a path towards clearer regulations and potential future approvals like an XRP ETF[1].
The closure of the case was attributed to a lack of regulatory clarity in the U.S. regarding cryptocurrencies. As Stuart Alderoty, Ripple's Chief Legal Officer, explained, the SEC cannot enforce actions without clear legal guidelines, a challenge that has persisted in the industry[2].
Since the resolution of the case was achieved after the SEC Fiscal Year 2023 enforcement report was compiled, the report may not have included the Ripple case due to the ongoing status of the case at the time the report was released. Typically, such reports are published at the end of the fiscal year, and because the case was still in progress then, it was not considered resolved enough to be included in the report.
Sources:
- Cointelegraph
- Stuart Alderoty, Ripple's Chief Legal Officer
- The XRP community has criticized SEC Chair Gary Gensler, urging him to quit if he genuinely aims to protect investors, citing the SEC's alleged lack of effectiveness in cases like LBRY.
- Despite the SEC's annual enforcement report showcasing numerous actions against crypto frauds, unregistered offerings, and noncompliance, the XRP community is dissatisfied with the report's omission of the Ripple case, which is currently pending.
- Investors and XRP advocates have questioned the SEC's regulatory approach, expressing concern that excessive legal fees and lack of tangible results have hurt investors more than they have protected them, as evidenced in the LBRY case.
- The SEC's enforcement report revealed that technology companies like Terraform Labs, Hex, PulseChain, PulseX, FTX, Genesis/Gemini, Celsius, Kraken, Nexo, Beaxy, Bittrex, Binance, Coinbase, and LBRY, Inc. faced enforcement actions for various violations, including fraud and noncompliance.
