Ripple vs. SEC: SEC Faces Judicial Setback as Cybersecurity Regulation Bid Dismissed
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The ongoing XRP lawsuit has drawn attention to yet another setback for the U.S. SEC, highlighting challenges in its regulatory authority. The SEC’s latest defeat in the SolarWinds case came when a federal judge dismissed its attempt to regulate corporate cybersecurity controls. One of the known lawyers took a jab at Gary Gensler’s ruling and his latest defeat, which marked the end of the SEC’s overreach.
SEC’s Major Setback: Judge Dismisses SEC’s Cybersecurity Regulation Effort
For a long time, the SEC has been arguing for broader regulatory power over all internal controls of public companies, including cybersecurity measures. However, U.S. District Judge Paul A. Engelmayer ruled against this, stating that such an extension would give the SEC overly broad regulatory power.
Judge Engelmayer’s decision emphasized that the SEC’s authority should remain confined to financial controls and not extend to all internal safeguards. According to the judge, accepting the SEC’s argument would allow the agency to regulate background checks, padlocks for storage, water park safety measures, and password configurations—areas far beyond its intended scope.
A Big Relief For Corporates!
This ruling has relieved many companies worried about regulatory penalties following cyberattacks, especially in light of the 2020 cyberattack on SolarWinds, where Russian hackers infiltrated the company’s software to access federal agencies and major tech firms.
Legal Insight
Prominent lawyer and critic of the SEC, James Murphy, known as MetaLawMan on X, has been particularly outspoken, criticizing SEC Chair Gary Gensler and calling for a reconsideration of funding for the SEC’s initiatives. Murphy’s views got the XRP community’s support, and they have long questioned the SEC’s approach to regulation. The ongoing XRP lawsuit, a hot topic with various speculations about its outcome, adds to the scrutiny of the SEC’s actions.
How many embarrassing losses will it take for Congress to cut off the funding for @GaryGensler's ridiculous attacks on American companies?
https://t.co/zDYKkHw4PB
— MetaLawMan (@MetaLawMan) July 19, 2024
The Ripple vs. SEC Battle
In the meantime, the defeat in the SolarWinds case underscores the challenges the SEC faces in enforcing its regulatory agenda. It raises questions about its strategies and leadership under Gary Gensler. Ripple CEO Brad Garlinghouse has expressed optimism about the lawsuit ending soon, though he has not provided a specific timeline.
The Ripple vs. SEC battle, combined with the recent defeat in the SolarWinds case, highlights the SEC’s difficulties in asserting its regulatory power and maintaining its approach to cybersecurity and other internal corporate controls. As the XRP lawsuit continues, the SEC’s methods and leadership remain critical topics of debate within the crypto community and beyond.
