Former SEC Chair Jay Clayton has been appointed by Trump as the new U.S. Attorney for the Southern District of New York. Notably, Clayton was the one who initiated the SEC’s lawsuit against Ripple. He has committed to ending aggressive cryptocurrency regulations at the SDNY, despite having played a key role in one of the most significant enforcement actions in the sector.
In a strategic move, Trump intends to sidestep a potentially contentious confirmation process, which Senator Chuck Schumer has promised to obstruct. This situation prompts concerns about the competence of the new political figures aligning themselves with the cryptocurrency industry.
Clayton’s Role in the Ripple Case
Trump has publicly vowed to foster a more cryptocurrency-friendly regulatory environment, which includes instructing prosecutors to halt enforcement activities against the industry.
Initially nominated by Trump in November, Jay Clayton has now assumed the role of Acting Attorney as of today. However, there’s a significant caveat — he was the one who filed the SEC’s lawsuit against Ripple.
The SEC’s case against Ripple is viewed as a pivotal action from the era of Chair Gary Gensler, although it was Clayton who set the motion in place. He was at the SEC from 2017 until 2020 but resigned earlier than expected. The legal action against Ripple was filed on December 22, and Clayton resigned the following day, an event Ripple dubbed a “parting shot.”
Now, years later, Clayton finds himself in a position where he criticizes government crackdowns on cryptocurrencies, a shift that has sparked ire from Ripple’s CEO, Brad Garlinghouse, amidst further media appearances.
Watching this clip makes my blood boil.
The hypocrisy is shocking. @CNBC @SquawkCNBC should be calling him out for the bullshit.
(As a reminder, jay clayton brought the case against ripple, me and Chris Larsen. And left the building the next day). October 28, 2023
— Brad Garlinghouse (@bgarlinghouse) October 28, 2023
Complications in the Confirmation Journey
Currently, Ripple has not made any statements regarding Clayton’s new position, though his appointment is likely to stir discontent. The Senate confirmation process can often be intensely challenging.
Trump suggested Paul Atkins for the SEC Chair nearly five months ago, yet he only took the position yesterday. With Clayton, Trump is adopting a different approach.
As reported by local news, Trump has appointed Clayton as the Acting U.S. Attorney, envisioning him in the permanent role. Although Clayton was nominated last week, Senate Minority Leader Chuck Schumer has pledged to prevent his confirmation.
Schumer has expressed that Clayton lacks “fidelity to the law.”
Nevertheless, Clayton can serve as Acting U.S. Attorney without a confirmation vote and likely will not require one. If the Senate fails to confirm him within 120 days, judges in the SDNY can formally appoint him until a nominee is approved.
Thus, Trump doesn’t need to propose another nominee, allowing Clayton the possibility of serving a regular term.
This scenario powerfully illustrates how much political leverage the cryptocurrency sector has gained. The very individual who initiated the Ripple lawsuit is now positioned to counteract future enforcement actions. However, this development isn’t entirely positive.
How reliable can the industry be on its former adversaries? How many of cryptocurrency’s current supporters would pivot to enforcement if circumstances changed? These questions continue to loom within the cryptocurrency community.
