A U.S. federal judge has dismissed a proposed $500,000 settlement between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), delivering a procedural setback in one of the cryptocurrency sector's most closely watched legal disputes.
U.S. District Judge Analisa Torres, overseeing the case since 2020, ruled on Thursday that the joint request from Ripple and the SEC was "procedurally improper" and beyond the court's jurisdiction. The case is currently under appeal in the Second Circuit Court of Appeals, which has temporarily suspended the lower court's authority to take further action.
Background of the Rejected Proposal
The rejected agreement sought to:
- Reduce Ripple's penalty from $1.25 billion to $500,000.
- Lift existing injunctions imposed in June 2024.
Both parties had consented to the terms and requested an "indicative ruling"—a formal signal of how the court would act if the case were remanded.
Judge Torres’ Key Findings
Judge Torres declined the request, stating that even if jurisdiction were restored, she would dismiss the motion due to procedural flaws. She highlighted:
- Failure to meet legal standards: The parties did not satisfy the stringent requirements for modifying a final judgment.
- Exceptional relief under Rule 60: Such amendments are granted only under extraordinary circumstances under the Federal Rules of Civil Procedure.
Ripple’s Response
Stuart Alderoty, Ripple’s Chief Legal Officer, downplayed the ruling, asserting on X (formerly Twitter):
"Today’s order does not alter Ripple’s legal victories."
He confirmed that Ripple and the SEC would return to court to address procedural issues.
Broader Implications for Crypto Regulation
This case stems from a December 2020 SEC lawsuit alleging Ripple raised $1.3 billion through unregistered XRP sales, which the SEC classified as securities. It has become a focal point in U.S. crypto regulatory debates.
Shifting Regulatory Landscape
The ruling coincides with evolving SEC policies under the new administration, which has adopted a more lenient stance toward digital assets, including dropping cases against Coinbase and 👉 Kraken.
Market Impact
Following the news:
- XRP price dropped 6%, trading at $2.38 at press time.
FAQ Section
Q: What was the original penalty Ripple faced?
A: The SEC initially sought $1.25 billion in penalties before the proposed reduction to $500,000.
Q: Can Ripple and the SEC renegotiate the settlement?
A: Yes, both parties plan to seek remand from the appellate court to finalize the agreement.
Q: How does this affect XRP’s classification as a security?
A: The core dispute remains unresolved, leaving XRP’s regulatory status uncertain.
Next Steps
Ripple and the SEC remain committed to resolving the case. Key actions include:
- Addressing procedural deficiencies in court.
- Pursuing appellate review for remand.
For updates on crypto regulations, follow 👉 OKX’s insights.