SEC and Ripple Clash Again in Court Over $125 Million Escrow Fund – What You Need to Know

Ripple and the SEC are back in court—this time battling over a $125 million escrow fund that could shape the future of crypto regulation.

Why it matters: The outcome may set precedent for how digital assets are classified and regulated. No pressure.

The fight continues: Both sides dug in their heels during the latest hearing, with Ripple arguing for flexibility and the SEC demanding strict compliance. Because nothing says ''financial innovation'' like a good old-fashioned bureaucratic standoff.

What''s next: Observers predict this could drag on longer than a Bitcoin bear market—with legal fees potentially rivaling the escrow amount itself.

Ripple-SEC Drama Continues

In 2020, the SEC charged Ripple in court, accusing the latter of selling over $1.3 billion in unregistered securities (XRP) sales. 

In July 2023, a judge ruled the secondary sales of XRP do not qualify as securities transactions, representing a major partial victory for the crypto market. However, the final judgement issued in August 2024 included an injunction that ordered Ripple to pay a $125 million penalty fee in violation of section 5 of the Securities Act 1993. 

Notably, the specified $125 million was soon placed in an escrow account pending the conclusion of the case, which was swiftly followed by notices of appeals by both parties. However, the briefs of both appeals were placed on hold on April 16, 2025, following a report of an agreement-in-principle between both parties.

Ripple, SEC Try Motion Again

In what appears to be part of the agreement between the SEC and Ripple, both parties approached the court on May 8 seeking a modification to the structure of the $125 injunction fee against the blockchain company on the basis of “exceptional circumstances”. 

The joint motion proposed that only $50 million is paid to the SEC as a penalty, while the remainder is returned to Ripple. However, the court rejected this motion on May 16 due to no explanation on how these “exceptional circumstances” warrant a modification. 

In another joint motion filed on June 12, both parties delicately state these “exceptional circumstances,” which include the fact that the proposed agreement does not alter the initial summary judgment from the court. 

Furthermore, the motion also highlights the requested relief favors both parties in the case as well as the public interest and introduces a settlement capable of permanently finalizing this case. In addition, this proposed change WOULD prevent the progress of the appeal briefs and save court resources. 

Finally, both the SEC and Ripple reiterate that granting the injunction structure modification and thereby terminating the case aligns with the SEC’s current policy of dismissing certain crypto cases by joint stipulation.