Judge Rejects $50M Settlement Deal, Ripple and SEC to Revisit Court
The legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) has hit another roadblock as Judge Analisa Torres has denied the joint request for an indicative ruling that would have facilitated their settlement plan. This latest development comes as a setback for both parties as they navigate the complex legal landscape surrounding the sale of XRP.
Why Was It Denied?
The court’s decision to deny the request was primarily based on procedural grounds. Judge Torres highlighted that the motion filed by Ripple and the SEC did not adhere to the correct legal process required for such a request. The motion, submitted on May 8, 2025, sought to lift the order prohibiting Ripple from selling XRP in violation of the law and reduce the company’s penalty from $125 million to $50 million. However, the court deemed that the parties failed to meet the necessary legal standards for the request to be granted.
A Quick Recap of the Case
The legal saga between Ripple and the SEC dates back to 2020 when the SEC filed a lawsuit against Ripple, alleging that the company had been selling XRP as an unregistered security. In 2024, Ripple was ordered to pay a substantial penalty, leading to appeals from both parties. Despite ongoing appeals, Ripple and the SEC recently reached a settlement agreement.
As part of the settlement plan, Ripple and the SEC signed an agreement in April and May of this year. They requested the court to pause the appeals and support their deal. However, Judge Torres denied the request citing non-compliance with Rule 60, which outlines the procedures for modifying final court decisions. The court emphasized that the motion lacked justification for an exception to be made in this instance.
What Happens Next?
Following the court’s decision, attorney Bill Morgan provided insights into the intended settlement process. He stated that the agreement had been finalized, the appeals were put on hold, and the parties had sought an indicative ruling. Had the ruling been approved, they would have requested a limited remand from the appeals court to formalize the settlement. With the motion now denied, the process has encountered a hurdle.
Ripple’s Chief Legal Officer, Stuart Alderoty, clarified the implications of the court’s decision, emphasizing that it pertains to procedural concerns rather than the core issues of the case. He reiterated Ripple’s stance that XRP is not a security and expressed the commitment to resolving the case in collaboration with the SEC. The next steps for Ripple and the SEC involve reassessing their legal approach and determining whether to rectify their paperwork for another attempt or explore alternative avenues.
