Lawmaker urges SEC to refocus crypto efforts after Ripple decision

U.S. Rep. Ritchie Torres, D-N.Y., called on the Securities and Exchange Commission to refocus its efforts to go after bad actors in the cryptocurrency sector following a judge’s split decision last week in an ongoing dispute between Ripple Labs and the regulator. 

In a letter sent Tuesday to SEC Chair Gary Gensler, Torres said he looked forward to how the agency plans to “reassess its regulatory assault on crypto assets” following the ruling. Torres is a member of the House Financial Services Committee, which is tasked with overseeing the SEC. 

“I hope that the SEC will find itself so chastened by the court’s decision that it will concentrate the Commission’s enforcement energies where it belongs: on the bonafide bad actors who perpetrate serious transgressions like fraud, market manipulation, and the misappropriation of customer funds,” Torres said. 

Advocates for the crypto industry were elated last week after a New York judge ruled that XRP was not a security when sold on the secondary market in “blind bid” sales. Judge Analisa Torres did, however, side with the SEC when she said that the token was a security when sold to institutional investors. 

Future cases

Torres, who also sits on the Congressional Blockchain Caucus, said the decision could have future implications. 

“The ability of the SEC to make up the law as it goes along will be, in the meantime, constrained by the persuasive authority that the Torres Doctrine will likely command in future legal cases,” Torres said. 

The SEC declined to comment. Gensler has said he was disappointed over the treatment of retail investors in the judge’s decision. 

“While disappointed on what they said about retail investors, we’re still looking at it and assessing that opinion,” Gensler said on Monday at a National Press Club luncheon where he was discussing artificial intelligence.

Gensler also told Yahoo Finance on Monday that it was “too early” to tell whether the SEC will draft more crypto-specific rules following that decision. 

Torres did not set a deadline on his letter for when he wants a response.