US District Judge Analisa Torres recently denied a joint motion filed by the Securities and Exchange Commission (SEC) and Ripple for a proposed settlement to resolve the ongoing enforcement action over the sale of XRP. The denial, issued on May 15, does not mark the end of settlement efforts but rather rejects the request as procedurally improper.
The motion, submitted on May 8, sought the court’s approval to dissolve the injunction from its August 2024 final judgment and release a $125 million civil penalty fund held in escrow. Under the proposed settlement, Ripple would pay the SEC $50 million, with the remaining funds returned to the company. The SEC clarified that the plan reflected its current enforcement priorities and was not intended to set a precedent.
These steps were part of the regulator’s ongoing efforts to settle its legal battle with Ripple, which has been going on for years.
Judge Torres ruled that the parties’ request did not follow the correct procedure under federal rules. Instead of seeking relief under Rule 60 of the Federal Rules of Civil Procedure, which governs post-judgment relief, the parties presented the filing as a request for “settlement approval.” Judge Torres highlighted that the parties failed to meet the legal standard required to vacate the earlier ruling or reduce the penalty.
Ripple’s chief legal officer, Stuart Alderoty, emphasized that the court’s ruling does not alter the decisions favoring Ripple. He stated that both Ripple and the SEC are in agreement to resolve the case and will revisit the issue with the court together.
Crypto attorney Fred Rispoli commented that the denial was a result of a technical misstep and not a rejection of the settlement itself. He noted that the parties would refile the motion under the correct rule and stressed the importance of demonstrating exceptional circumstances to seek relief.
The case, initiated in December 2020, alleged that Ripple conducted unregistered securities offerings through its sales of XRP. Following a mixed ruling in July 2023 and a final judgment in August 2024, both the SEC and Ripple appealed the decision to the Second Circuit. The parties jointly moved to suspend the proceedings in April, signaling an agreement in principle to resolve the case.
With the recent denial of the settlement motion, the SEC and Ripple must decide on the next steps to finalize a settlement and bring an end to the four-year legal dispute. The parties may revise their motion and proceed through the appropriate channels to reach a resolution.