SEC Enforcement Chief Resigns Amid Ripple Appeal Challenge

Gurbir Grewal, the U.S. Securities and Exchange Commission’s (SEC) Director of Enforcement, has announced his resignation, which takes effect on October 11, 2024.

This unexpected departure occurs at a pivotal time for the regulator, particularly as it pursues an appeal in its notable case against Ripple.

Grewal Resigns as SEC Pursues Ripple Appeal

The resignation was disclosed in a press release from the agency on October 2, where Chair Gary Gensler lauded Grewal as an “acclaimed public servant.”

The SEC has appointed Sanjay Wadhwa, currently serving as Deputy Director and a dedicated member of the Commission for 21 years, as the interim successor.

Sam Waldon, the Chief Counsel of the Enforcement Division, will assume Wadhwa’s role until a permanent replacement is appointed.

Grewal’s abrupt departure, announced with only nine days’ notice, has caught the attention of legal analysts and crypto observers. Notably, well-known crypto attorney Jake Chervinsky expressed his concern regarding the timing of the director’s exit, deeming it “unusual.”

Chervinsky hinted that this might indicate an end to the SEC’s “campaign of unlawful harassment and misrepresentation.”

Reports suggest that Grewal resigned mere hours before the SEC submitted a notice of appeal in its case against Ripple.

As Fox journalist Eleanor Terrett pointed out, the notice does not clarify which particular issues the Commission intends to appeal. It could challenge the ruling related to Ripple’s programmatic sales of its XRP token or the penalties imposed on the company for breaching institutional sale laws, or potentially both.

Legal Experts Weigh In on SEC Appeal

Regardless of the SEC’s objectives, the appeal has faced significant backlash from other legal professionals in the industry. In a September 3 post on X, attorney Jeremy Hogan, who is closely monitoring the Ripple situation, described it as a “major error.” He argued that the move carries more risks than advantages.

Hogan indicated that statistically, the SEC is more likely to lose the appeal, particularly given the fact-based nature of Judge Torres’ original decision.

However, he also pointed out that even if the SEC does win, it would likely result in increased financial penalties for Ripple without providing any additional protections for investors.

Additionally, he proposed that the crypto payments company might invoke its “Blue Sky” law defense, leveraging state securities regulations that existed before federal laws. If successful, Hogan believes this strategy could considerably diminish the SEC’s regulatory authority over the wider crypto sector.