Rewritten Article
Judge Turns Down SEC-Ripple Settlement Deal for Procedural Errors
Securities and Exchange Commission's and Ripple's Request for Amendment in XRP Settlement Agreement Denied by Judge
Breaking Down the Scene: A judge has rejected the proposed settlement agreement between the SEC and Ripple Labs, citing procedural lapses in their joint filing. The deal would have significantly reduced Ripple's penalty from $125 million to $50 million, bringing an end to a long-standing legal feud.
In a court order issued on May 15, U.S. District Judge Analisa Torres stated that even if she had jurisdiction, she would still deny the motion as it was "procedurally improper." This surprising decision came just weeks after both parties consented to drop their appeals aiming to resolve their four-year-long legal conflict.
The SEC and Ripple filed for an indicative ruling, a preliminary signal from the court indicating acceptance of a deal lifting Ripple's injunction and lowering its fine to $50 million. However, Judge Torres mentioned that cases on appeal typically lose the trial court's authority to act, and jurisdiction in this instance rested with the Second Circuit where cross-appeals were filed in August 2024.
Last month, Ripple Labs and the SEC jointly petitioned the Second Circuit to temporarily halt their appeals as they pursued a negotiated resolution of their case. The filing also confirmed that the SEC would drop its appeal scheduled for October. Yet, the Second Circuit has yet to deliberate on that request.
The recent filing bypassed Rule 60 governing 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 explained in her decision.
Follow the XRP Price: Decrypt reached out to Ripple for comment and will update the story when a response is received.
The conflict between the SEC and Ripple dates back to December 2020, when the SEC accused Ripple of raising $1.3 billion via unregistered XRP sales. In July 2023, Judge Torres ruled that institutional sales violated securities laws, but exchange-based retail sales did not, generating optimism in the crypto sector.
Since Donald Trump's return to office, the SEC under the leadership of Mark Uyeda has scaled back crypto enforcement. Lawsuits against Coinbase, Kraken, and several others have been dropped. The new SEC Chair, Paul Atkins, is anticipated to adopt a more lenient stance than former chair Gary Gensler.
In its last announcement, the SEC confirmed the $50 million agreement. 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 after the judge's decision. "Ripple and the SEC are committed to resolving this case and will revisit this issue with the Court, together."
As of now, XRP, which has skyrocketed over 366% in the past year, dropped by 1.6%, trading at $2.42 according to CoinGecko data.
Stay tuned for updates as the legal saga between the SEC and Ripple unfolds!
Confirmed by Our Team:The legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs has experienced twists and turns after the denial of the proposed settlement. Here are the essential points:
- Settlement Rejection: On May 16, 2025, Judge Analisa Torres turned down the joint plea by the SEC and Ripple Labs to issue a guiding decision that would pave the way for the settlement. The rejection was due to procedural flaws, as the plea did not adhere to proper legal procedures outlined in Rule 60 for modifying final court decisions[2][5].
- Proposed Settlement Terms: The proposed settlement involved Ripple paying a fine of $50 million, significantly lower than the initial $125 million. However, the proposed settlement was not approved due to the procedural issues[3][4].
- Case Background: The dispute began in 2020 when the SEC sued Ripple for allegedly promoting the sale of XRP as unregistered securities. In 2024, Ripple was ordered to pay a substantial fine and restricted from selling XRP. Despite both parties appealing these decisions, they had agreed to settle[5].
- Future Outlook: The denial of the settlement means that the case will continue, and both parties are expected to proceed with their appeals. The procedural setback complicates the journey towards a resolution and might lead to additional legal challenges[5].
- The rejection of the settlement deal proposed by the SEC and Ripple Labs, which could have reduced Ripple's penalty from $125 million to $50 million, has highlighted the importance of following proper procedures in digital asset finance, as the case deals with crypto and digital assets like XRP.
- The denial of the joint plea by the SEC and Ripple in May 2025 was due to procedural flaws in following Rule 60 for modifying final court decisions, which regulates indicative rulings in business and finance, and could potentially have implications for future settlements involving digital assets.
- Though the settlement deal was denied, Ripple has confirmed paying the reduced fine of $50 million, indicative of the company's commitment to complying with regulations while navigating the intricate landscape of crypto finance and business.
