Court Slams SEC’s $125M XRP Settlement Bid—Ripple Dodges Regulatory Bullet

Another day, another crypto regulatory showdown—but this time, the SEC’s playbook got shredded. A federal judge just torched the agency’s proposed $125 million settlement with Ripple, calling the fine ’arbitrary theater’ in a ruling that left lawyers scrambling.

Behind the gavel: The court found zero correlation between the SEC’s demanded penalty and actual investor harm. Turns out throwing nine-figure numbers at the wall doesn’t make them stick—even when Wall Street’s favorite regulators are doing the throwing.

Ripple’s CLO Brad Garlinghouse practically crowed on X (formerly Twitter): ’Told you we’d fight this overreach.’ Meanwhile, XRP holders celebrated the win by doing what crypto traders do best—panic-buying the news.

Bonus finance cynicism: Nothing unites crypto bros and institutional investors faster than watching the SEC trip over its own feet. At this rate, Gary Gensler might need to mint an enforcement token to fund his next losing battle.

• Judge Torres rejected Ripple and the SEC’s joint bid to dissolve the XRP sales injunction.
• The court ruled that their settlement request failed to meet procedural requirements under Rule 60.
• Ripple and the SEC are still aligned to resolve the case through a revised joint motion.

In a dramatic development in the long-running SEC vs. Ripple lawsuit, Judge Analisa Torres denied a joint motion by Ripple Labs and the Securities and Exchange Commission seeking a path to settlement.

The motion sought to lift the injunction in place that prohibited institutional XRP sales by Ripple and reduce the civil fine from $125 million to $50 million. The judge, however, did not grant the request, deeming it “procedurally improper.”

#XRPCommunity #SECGov v. #Ripple #XRP Judge Torres has denied the parties’ motion for an indicative ruling. “If jurisdiction were restored to this Court, the Court WOULD deny the parties’ motion as procedurally improper.” pic.twitter.com/4s95ILvzsy

The crux of the matter is that of the procedural mechanism utilized. Parties had invoked the provision of Federal Rule of Civil Procedure 62.1, by means of which a district court is permitted to make a non-binding indicative ruling in cases in which its jurisdiction is restricted on account of an active appeal.

Judge Torres ruled that even assuming jurisdiction was revived, she would have rejected the motion, noting that the parties had not achieved the required legal burden for this relief.

Legal Oversight in Motion Draws Scrutiny

The motion, submitted on May 8, 2025, was preceded by a settlement agreement on April 23 being signed by Ripple’s lawyers and subsequently sanctioned by the SEC. Both had sought the approval of their agreement in accordance with the SEC v. Citigroup Global Markets Inc. standard, in which review of consent agreements is permitted.

Based on precedent in the law that is quoted by the judge, this kind of relief is awarded only in “exceptional circumstances.” The motion, however, did not cite Rule 60 at all. Instead, Ripple and the SEC presented the proposal in the FORM of a “settlement,” missing the proper procedural avenue by mistake. That mistake was fatal.

Attorney Bill Morgan clarified that the process of settlement was in motion but went off course on the fourth step, when the court dismissed their indicative ruling on account of a procedural flaw. The court specified that should they desire to proceed, the parties need to re-file according to the proper rule.

How the settlement process is going

1. Settlement agreement signed by Ripple parties on April 23, 2025 and by the SEC on May 8, 2025 ✅.

2. Parties filed a motion to hold the appeal and cross appeal in abeyance ✅

3. Parties file rule 62.1 motion asking for an indicative…

SEC and Ripple Still on the Same Page

In spite of the procedural hiccup, Ripple’s Chief Legal Officer, Stuart Alderoty, assured that everything remains the same with regard to the parties’ mutual intent for settlement. He stressed that the court’s decision was for how they should be submitting, but not the substance of their submission.

Nothing in today’s order changes Ripple’s wins (i.e. XRP is not a security, etc). This is about procedural concerns with the dismissal of Ripple’s cross-appeal. Ripple and the SEC are fully in agreement to resolve this case and will revisit this issue with the Court, together. https://t.co/vBQdBD3FNe

Ripple and the SEC are in it together in their quest for a resolution of the case. A re-drafted joint motion, properly supported by Rule 60, should be next. Upon being granted, it would enable the parties to go ahead with a lowered penalty and revoke the ban on sales, the last steps toward an end for this high-profile case.

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