Ripple and SEC Strive for a Conclusive Settlement
The legal tug-of-war between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs has taken a new turn. Both entities have appealed to the Second Circuit Court of Appeals to maintain a pause on their ongoing appeals. This move aims to persuade the trial judge to conclude a prolonged legal battle with a $50 million settlement and lift the injunction against Ripple, a San Francisco-based payments company.
Progress Towards Resolution
In a recent status update, spanning eight pages, the SEC informed the appellate court that both parties had reached an agreement in principle, pending Commission approval. This agreement seeks to resolve the underlying legal case and the appeals. Consequently, they have requested that the court continue to hold the appeals in abeyance until the next scheduled update on August 15, 2025.
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This filing revisits a swift sequence of events that unfolded after the settlement agreement was signed on May 8. According to the agreement, Ripple is set to pay $50 million—an amount significantly lower than the $125 million civil penalty imposed earlier. Additionally, the remaining funds in escrow, along with accrued interest, will be returned to Ripple.
Conditions for Settlement Approval
The settlement hinges on U.S. District Judge Analisa Torres’ decision to dissolve the permanent injunction she issued on August 7, 2024, and to authorize the release of the escrowed funds. The status report clarifies that if the district court issues the requested indicative ruling, both parties will pursue a limited remand to enable the trial court to amend its judgment. Once this is accomplished, both the SEC’s appeal and Ripple’s counter-appeal will be dismissed.
Initially, Judge Torres was hesitant. On May 15, she rejected the first indicative ruling motion, citing its inability to address the “exceptional circumstances” standard outlined in Federal Rule 60(b). The adversaries returned on June 12 with a comprehensive 52-page memorandum. They argued that ongoing litigation would squander judicial resources and emphasized that vacating the injunction is crucial for the settlement. They also pointed out the SEC’s shift toward negotiated resolutions in the crypto realm, particularly following Acting Chair Mark T. Uyeda’s January crypto task force announcement.
Shifting Strategies at the SEC
The Commission’s current approach starkly contrasts with its previous stance under former Chair Gary Gensler, who favored an enforcement-first strategy. This strategy led to the December 2020 complaint and, following intense discovery, a divided summary judgment on July 13, 2023. Judge Torres ruled that Ripple’s $728.9 million in direct institutional XRP sales constituted unregistered securities offerings, while programmatic exchange sales and other distributions did not.
The final judgment in August 2024 cemented a $125 million penalty and the injunction, requiring Ripple to allocate 111% of the fine into an interest-bearing escrow account. Both parties appealed in October 2024. The SEC submitted its opening brief on January 15, 2025, but before Ripple could respond, both parties jointly requested a pause in the case from the Second Circuit on April 10, citing their emerging settlement. The court approved this request on April 16.
Exceptional Circumstances and Future Prospects
The renewed motion argues that several factors have emerged that courts recognize as “exceptional.” These include a comprehensive settlement that alters final relief, the SEC’s public recalibration of crypto enforcement, and the lack of prejudice to non-parties, as the underlying summary judgment opinion remains intact. The memorandum references recent voluntary dismissals of other high-profile crypto cases as evidence that terminating the appeals aligns with dismissals by joint stipulation.
The pivotal question remains: Will Judge Torres be convinced this time? If she indicates a willingness to dissolve the injunction and reduce the penalty, a limited remand from the Second Circuit would likely follow. However, if she hesitates, the appeals—currently fully briefed only on the SEC’s side—could reignite.
At the time of writing, XRP was trading at $2.247.
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