SEC enforcement chief exits as Ripple’s appeal looms

US Securities and Exchange Commission (SEC) Chief Enforcement Officer Gurbir Grewal has announced his resignation effective October 11, 2024.

His sudden departure comes at a critical time for the regulator as it files an appeal in its high-profile case against Ripple.

Grewal leaves as SEC appeals Ripple’s decision

The departure was announced in an Oct. 2 press release from the agency, with Chairman Gary Gensler describing Grewal as a “consummate public servant.”

The SEC also appointed Sanjay Wadhwa, the current deputy director and a stalwart of the Commission for 21 years, as an interim replacement.

Sam Waldon, the Chief Counsel of the Enforcement Division, will fill Wadhwa’s position until a substantive replacement is found.

With only nine days notice, Grewal’s sudden departure has raised eyebrows among legal experts and crypto commentators. Chief among them was prominent crypto attorney Jake Chervinsky, who took to X to express his concern over the timing of the director’s departure. Calling it “not normal”.

Chervinsky suggested it could signal the end of the SEC’s “campaign of illegal harassment and misrepresentation.”

Grewal reportedly resigned just hours before the SEC filed a notice of appeal in its case against Ripple.

As Fox reporter Eleanor Terrett pointed out, the notice does not explicitly state which issues the Commission plans to appeal. He could challenge the ruling on Ripple’s programmatic sales of its native XRP token, the amount the company was ordered to pay for violating the institutional sales law, or even both.

Legal Minds reacts to the SEC’s appeal

Regardless of its intentions, the appeal has drawn harsh criticism from other legal experts in the space. In a September 3 post on X, Jeremy Hogan, a lawyer who follows the Ripple case closely, called it a “huge mistake.” He suggested the move carried more risks than benefits.

He noted that statistically, the SEC is more likely to lose the appeal, especially given the “fact-heavy” nature of Judge Torres’ original ruling.

However, the lawyer noted that even if the SEC ultimately wins, it would only result in more financial penalties for Ripple without providing additional protection for investors.

He also suggested that the crypto-payments company could step up its “Blue Sky” law defense by taking advantage of state securities laws that predate federal regulations. If successful, Hogan believes the gambit could significantly weaken the SEC’s regulatory powers over the broader crypto market.

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