The U.S. Securities and Exchange Commission (SEC) has faced yet another courtroom setback, drawing significant attention from the crypto community. This time, a judge dismissed the SEC’s attempt to regulate corporate cybersecurity, a move hailed by critics, including prominent lawyer James Murphy, known as MetaLawMan on X. This defeat comes amid the ongoing XRP lawsuit, further intensifying scrutiny on SEC Chair Gary Gensler.
SEC Faces Another Courtroom Defeat Amid Ongoing XRP Lawsuit
The cryptocurrency community is reacting strongly as the SEC faces another legal defeat amid the high-profile XRP lawsuit. The SEC recently suffered a significant loss in its case against SolarWinds, where a federal judge rejected the SEC’s bid to oversee corporate cybersecurity controls. This ruling has broad implications for the SEC’s regulatory reach.
The SEC argued for authority over all internal controls of public companies, including cybersecurity measures. However, U.S. District Judge Paul A. Engelmayer dismissed this argument, stating it would grant the SEC overly broad regulatory power. Judge Engelmayer emphasized that accepting the SEC’s rationale would allow the agency to regulate unrelated areas such as background checks, padlocks, water park safety measures, and password configurations. The ruling clarified that the SEC’s authority should be limited to financial controls.
This decision has relieved many companies concerned about facing regulatory penalties following cyberattacks. The case originated from a 2020 cyberattack on SolarWinds, where Russian hackers infiltrated the company’s software to access federal agencies and major tech firms. The judge also dismissed the SEC’s claims that SolarWinds improperly disclosed the severity of the breach.
Ripple Community Reacts
The SEC’s latest defeat has caught the attention of the Ripple community, particularly amidst the ongoing XRP lawsuit. James Murphy, a prominent lawyer and critic of the SEC, voiced his concerns on X. Murphy argued that the SEC’s repeated losses should prompt Congress to reconsider funding for Gary Gensler’s initiatives against American companies.
Murphy’s criticism resonates with many in the XRP community who have long questioned the SEC’s approach to regulation. The XRP lawsuit remains a hot topic, with various speculations about its outcome and potential settlement. While some believe a settlement is unlikely, others anticipate a resolution soon. Ripple CEO Brad Garlinghouse has expressed optimism about the lawsuit concluding shortly, though no specific timeline has been provided.
Implications for the SEC
The ongoing Ripple vs. SEC battle highlights the challenges the SEC faces in enforcing its regulatory agenda. With the recent defeat in the SolarWinds case, the SEC’s authority and approach to cybersecurity regulation are under intense scrutiny. As the XRP lawsuit continues, the SEC’s strategies and leadership, particularly under Gary Gensler, remain critical topics of debate