In brief
- A federal judge denied SEC-Ripple settlement due to procedural errors in their joint filing.
- The proposed deal would have reduced Ripple's fine from $125 million to $50 million, ending a 4-year legal battle.
- Both parties remain committed to resolution despite the setback, with XRP trading at $2.42.
A federal judge has denied a joint bid by the SEC and Ripple Labs to approve their settlement, citing procedural errors just weeks after both sides agreed to drop their appeals and end a four-year legal battle.
U.S. District Judge Analisa Torres said Thursday that even if she had jurisdiction, she would still deny the motion as “procedurally improper.”
The SEC and Ripple had filed for an indicative ruling, a non-binding signal from the court that it would accept a deal dissolving Ripple’s injunction and reducing its $125 million fine to $50 million.
Such rulings are used when a case is on appeal and the trial court no longer has authority to act. In this instance, jurisdiction rested with the Second Circuit, where both parties filed cross-appeals after the final judgment in August 2024.
SEC Files for $50 Million Settlement With Ripple Over XRP Lawsuit
The Securities and Exchange Commission and Ripple Labs have officially settled a long-running lawsuit—over four years after the regulator went after the fintech firm. Wall Street's top regulator the SEC announced the settlement Thursday, after Ripple execs said in March that the agency was backing off. Ripple and two of its executives, CEO Brad Garlinghouse and Executive Chairman Chris Larsen, will pay a total of $50 million to the SEC to settle the case, the announcement said. Ripple had previo...
Last month, Ripple Labs and the SEC jointly filed a request to the Second Circuit to suspend those appeals as they “pursue a negotiated resolution” of their case.
The filing also confirmed that the SEC would drop its October appeal. However, the Second Circuit has not yet ruled on that request.
But the recent filing to Judge Torres bypassed Rule 60 of civil procedure, which governs relief from final judgments, and failed to demonstrate the “exceptional circumstances” required under that standard.
“The parties have made no effort to satisfy that burden here; their request does not even mention the Rule,” Torres wrote in the May 15 order.
Decrypt has reached out to Ripple for comment and will update the story if and when a response is received.
The lawsuit dates back to December 2020, when the SEC accused Ripple of raising $1.3 billion through unregistered XRP sales.
In July 2023, Judge Torres ruled that institutional sales violated securities laws but that exchange-based retail sales did not, triggering a ray of optimism in the crypto industry.
Since Donald Trump’s return to office, the SEC under leadership of former acting chair Mark Uyeda has scaled back crypto enforcement.
Senate Confirms Crypto-Friendly Paul Atkins as Gensler's SEC Successor
Paul Atkins, President Trump’s pick to lead the SEC, was officially confirmed by a full Senate vote Wednesday evening, with lawmakers mostly voting along party lines. 52 Republicans voted to confirm Atkins, a pro-crypto SEC veteran who has made reforming the agency’s digital assets policy a top priority. 44 Democrats opposed the nomination. Atkins will succeed former SEC Chair Gary Gensler, who, under the Biden administration, attracted the ire of crypto leaders by suing or investigating almost...
Lawsuits against Coinbase, Kraken, and many others have been dropped, and new SEC Chair Paul Atkins, confirmed by the Senate last month, is expected to take a far more lenient stance than former chair Gary Gensler.
In its last week announcement, the SEC formally confirmed the $50 million deal. Ripple will pay the reduced fine, with the remaining $75 million in escrow returned to the company.
“Nothing in today’s order changes Ripple’s wins,” Ripple CLO Stuart Alderoty tweeted following the Judge’s order. “Ripple and the SEC are fully in agreement to resolve this case and will revisit this issue with the Court, together.”
XRP, which has surged over 366% for the past year, was down 1.6% on the day, trading at $2.42, according to CoinGecko data.
Edited by Stacy Elliott.
