XRP Lawsuit: Big Blow As Judge Shockingly Rejects Proposed SEC-Ripple Settlement Deal

A federal judge has dismissed the joint request from the U.S Securities and Exchange Commission (SEC) and Ripple to approve their $50 million settlement, which would have brought their years-long legal fight to a close. 

Judge Denies Motion As “Procedurally Improper”

U.S. District Court Judge Analisa Torres denied Ripple and the SEC’s joint motion for an indicative ruling on their agreement to settle their case. Judge Torres said Thursday that even if she had jurisdiction, she would still reject the motion as “procedurally improper.”

In legal jargon, an indicative ruling is a statement from a district court regarding how it would rule on a motion if it still had jurisdiction over the case. Notably, the SEC and Ripple had filed for an indicative ruling for the court to accept a deal dissolving Ripple’s injunction and slashing its fine to $50 million from $125 million.

Such rulings come in handy when a case is still in the appeal stage and the trial court no longer has jurisdiction to act. In this case, authority lies with a higher court, the Second Circuit, where both parties filed cross-appeals after the final judgment in August 2024.

Last month, Ripple and the SEC jointly filed a request to the Second Circuit to suspend their respective appeals after reaching an agreement-in-principle to finalize a potential settlement.

According to Judge Torres, the SEC and Ripple did not address the “heavy burden” they must overcome to vacate the injunction, adding that relief from judgment under Rule of Civil Procedure 60 should be made only in “exceptional circumstances.”

“The parties have made no effort to satisfy that burden here; their request does not even mention the Rule,” Torres said in the Thursday order.

“The meaning here is that the parties didn’t request relief under the right rule of civil procedure,” prominent crypto lawyer Fred Rispoli observed in a post on the X social media site. “So they will refile it under the correct rule, but, me reading between the lines, is that Ripple and the SEC need to get on all fours and beg for relief.”

So What Happens Next?

The case dates back to late 2020, when the SEC accused Ripple of raising $1.3 billion via an unregistered securities offering of the XRP cryptocurrency. Judge Torres ruled in Ripple’s favor in July 2023, declaring that institutional sales violated federal securities laws but that retail sales did not.

The SEC and Ripple previously suggested that if Judge Torres made an indicative ruling to lift the injunction against the blockchain payments company, they would jointly request a limited remand from the Second Circuit. This remand would have returned the case to the district court to enforce their mutual agreement and throw out their cross-appeals.

Ripple’s Chief Legal Officer, Stuart Alderoty, revealed that the company and the U.S. securities regulator are still completely in agreement to resolve the case and will jointly revisit the issue in court.

Ripple-promoted XRP, which has jumped by over 370% over the last year, was down 1.9% on the day, priced at $2.43, per data from CoinGecko.