SEC Enforcement Chief Quits as Ripple Appeal Looms

The Director of Enforcement of the United States Securities and Exchange Commission (SEC), Gurbir Grewal, has announced his resignation, effective October 11, 2024.

His sudden exit comes at a critical time for the regulator, as it appeals its high-profile case against Ripple.

Grewal resigns as SEC appeals Ripple decision

The departure was announced in an Oct. 2 press release by the agency, with President Gary Gensler describing Grewal as an “accomplished public servant.”

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

Sam Waldon, the chief counsel for the Law Enforcement Division, will take Wadhwa’s position until a substantial replacement can be found.

With just nine days’ notice, Grewal’s sudden exit raised eyebrows among legal experts and crypto commentators. Chief among them was prominent crypto lawyer Jake Chervinsky, who spoke to X to express concerns about the timing of the director’s departure. Call it “not normal.”

Chervinsky suggested this could mark the end of the SEC’s “campaign of unlawful harassment and misrepresentations.”

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

As Fox reporter Eleanor Terrett noted, the notice does not explicitly state which issues the Commission plans to appeal. He could challenge the decision regarding Ripple’s programmatic sales of its native XRP token, the amount the company was ordered to pay for violating the Institutional Sales Act, or even both.

Legal Minds React to SEC’s Call

Whatever its intentions, the call has drawn sharp criticism from other legal experts in the field. In a September 3 article on X, Jeremy Hogan, a lawyer who has been closely following the Ripple case, called it a “big 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 “factual” nature of Judge Torres’ initial ruling.

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

He also suggested that the crypto payments company could strengthen its “Blue Sky” legal defense, leveraging state securities laws that predate federal regulations. If successful, Hogan believes this strategy could significantly weaken the SEC’s regulatory powers in the broader crypto market.