SEC Veteran Expects Regulator's Crypto Investigations to ‘Grind to a Screeching Halt’

Former U.S. Securities and Exchange Commission (SEC) attorney John Reed Stark expects “all informal and formal SEC crypto-related investigations to grind to a screeching halt,” including its years-long legal battle with Ripple.

Stark, who previously served as chief of the SEC Office of Internet Enforcement, tweeted that he expects the “SEC to direct the SEC trial unit to pause all crypto-related litigation or, alternatively, to settle or dismiss all SEC crypto-related cases expeditiously on highly favorable terms to the crypto-defendants.”

The news comes as several high-profile crypto cases have been granted a pause in recent weeks. Earlier this month, a federal judge granted a joint request by the SEC and the crypto exchange Binance to pause proceedings for 60 days.

Meanwhile, in January another federal judge ruled that the SEC’s case against Coinbase must be paused until an appeals court can make a decision, prompting Stark to declare, “Stick a fork in the SEC’s case against Coinbase, it’s done.”

The former SEC lawyer, who spent two decades at the agency, said he expects all ongoing cryptocurrency-related appeals, including Ripple’s, to either be paused or “fully withdrawn.” In terms of when he expects the Ripple case to be paused, Stark simply stated “soon.”

Stark pointed to several recent incidents as backing for his claims. These include the reassignment of Jorge Tenreiro, the SEC’s lead litigator in high-profile crypto cases—including those of Ripple and Binance—to the SEC’s information technology department. The SEC reassigned over 50 lawyers and staff members earlier this month.

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SEC vs Ripple

The SEC first pursued action against Ripple in December 2020, alleging that Ripple’s CEO Brad Garlinghouse and co-founder Chris Larsen conducted $1.3 billion in unregistered securities offerings since 2013.

The proceedings, which concerned whether or not the XRP token should be considered a security (and therefore subject to securities regulations), dragged on through multiple rounds of appeals.

SEC Appeals Ripple Ruling, Seeks Reversal on XRP Classification

The U.S. Securities and Exchange Commission has formally filed an appeal in its legal battle with Ripple Labs, challenging a July 2023 ruling that partially dismissed claims against the company.  Filed late Wednesday, the appeal focuses on whether Ripple’s XRP sales to retail investors qualify as unregistered securities transactions under federal law. Citing the Howey Test, the SEC argues that Ripple’s promotional efforts created an expectation of profits among investors, making XRP an investmen...

In July 2023, a New York federal court found that Ripple’s sales of XRP on digital exchanges should not be considered investment contracts.

However, in January 2025, the SEC appealed to overturn the court’s earlier ruling.