Ripple and the SEC Inch Closer to a Resolution
Ripple-SEC Legal Battle Progresses: Is a Final Settlement on the Horizon?
A new development in the years-long legal tussle between Ripple and the Securities and Exchange Commission (SEC) has emerged as the two parties seek to dissolve an injunction, freeing up $125 million currently locked in escrow.
The Long March Towards a Settlement
In a recently filed motion in the Southern District of New York, Ripple and the SEC argue they've reached a proposed settlement, settling any remaining monetary penalties in the case. As part of this bargain, $50 million would go to the SEC, finalizing the penalty, while the remaining $75 million in escrow would be returned to Ripple.
To effectuate this arrangement, the duo has requested the court to lift the injunction embedded within the August 2024 final judgment, which previously barred Ripple from violating securities laws and ordered the $125 million civil penalty. The held funds have been in stasis since September 2024, when the court temporarily stayed the penalty's enforcement to accommodate appeals. Both parties filed notices of appeal last October, but proceedings had stalled since April 2025 to give space for settlement negotiations.
Exceptional Circumstances at Play
The parties' first attempt to modify the judgment in May 2025 was denied by Judge Analisa Torres due to insufficient reasoning about "exceptional circumstances." However, the current filing expediently provides a clear rationale. The SEC and Ripple assert that such exceptional circumstances exist, primarily due to the necessity of this revisal to finalize their settlement, circumvent appeals, and conserve court resources.
Living with the Rulings
It's essential to note that this proposed settlement will not challenge the court's July 2023 key rulings. These rulings determined that Ripple's XRP token sales to institutional investors violated securities laws, but found its broader programmatic sales did not. These judgments will remain intact and binding for both parties.
Shifting Regulatory Tide
This proposed settlement aligns with recent SEC actions indicating a shift in their regulatory strategy. Under the Trump leadership, the SEC has recently dropped high-profile crypto cases involving Coinbase, Consensys, and Kraken, aiming to clarify regulatory frameworks in the crypto space.
If the judge approves the joint request, the case would be sent back from the Second Circuit Court of Appeals to the district court, where the funds could then be redistributed in accordance with the new agreement.
This proposed settlement, pending the judge's approval, may signify an end to one of the longest-standing legal battles in the cryptocurrency landscape.
Additional Insights:
- Since the beginning of the legal battle in 2020, the SEC accused Ripple of conducting unregistered XRP sales worth $1.3 billion, and a federal judge ruled in July 2023 that Ripple's programmatic sales did not violate securities laws but found the company liable for institutional sales.
- In April 2025, both parties sought to pause their appeals in favor of settlement negotiations.
- If the judge accepts the joint request, the case would be referred back to the district court for distribution of funds according to the new terms.
- This settlement reflects a shift in the SEC's regulatory strategy, with moves to clarify regulatory frameworks in the crypto industry, as evidenced by dropped cases involving Coinbase, Consensys, and Kraken.
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- The proposed settlement between Ripple and the SEC could mark a significant milestone in the crypto finance industry, potentially signaling a shift in the SEC's regulatory strategy towards blockchain technology and business.
- if the judge approves the request, $50 million from the escrow will go to the SEC as part of the settlement, while the remaining $75 million will be returned to Ripple, demonstrating innovative solutions in handling finance and legal disputes within the digital asset sector.
