The US Securities and Exchange Commission (SEC) and Ripple have taken a significant step towards resolving their nearly five-year legal battle by jointly requesting the court to release a $125 million civil penalty held in escrow. In their latest filing submitted to the Manhattan District Court, both parties are seeking the dissolution of the injunction against Ripple, with $50 million to be paid to the SEC and the remaining $75 million to be released to Ripple.
This move comes after a judge rejected a proposed settlement last month that would have reduced Ripple’s penalty to $50 million. Judge Analisa Torres emphasized that exceptional circumstances must be shown to vacate a final judgment. In their new request filed Thursday, Ripple and the SEC are aiming to demonstrate that the circumstances now warrant closing the case and lifting the restrictions.
If Judge Torres approves this settlement, it would remove any remaining limitations on Ripple’s operations and enable the return of a significant amount of funds to the exchange. It could also mark the end of the legal battle between Ripple and the SEC, providing XRP with a legal foundation in the US and potentially paving the way for broader institutional adoption and growth.
Lawyers for both Ripple and the SEC highlighted that there are exceptional circumstances beyond the Settlement Agreement itself that justify modifying the final judgment to facilitate a settlement, resolve pending appeals, and conserve resources for both parties. This approach aligns with the SEC’s recent actions in other crypto registration cases and promotes efficiency in resolving the dispute.
The legal saga between Ripple and the SEC dates back to 2020 when the regulator accused Ripple of raising $1.3 billion through an unregistered securities sale. In a ruling over a year ago, Judge Torres determined that some of Ripple’s sales did not breach securities laws but classified other direct token sales to institutional investors as securities. In a significant development in March, Ripple CEO Brad Garlinghouse confirmed that the SEC had dropped its appeal, signaling a decisive victory for Ripple.
The SEC’s recent retreat from aggressive enforcement actions against crypto firms like Coinbase and Kraken under acting SEC Chair Mark Uyeda marks a shift from the approach taken by former SEC chair Gary Gensler. These reversals reflect a more nuanced approach to regulating the crypto industry and suggest a willingness to engage in constructive dialogue and cooperation with key players in the space.
In conclusion, the joint efforts of the SEC and Ripple to seek a ruling to dissolve the injunction and release the $125 million civil penalty represent a significant milestone in resolving their long-standing legal dispute. If approved, this settlement could have far-reaching implications for Ripple, the broader crypto industry, and the regulatory landscape in the US.
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