Key Takeaways
- A judge turned down the suggested settlement that aimed to reduce Ripple’s fine from $125 million to $50 million.
- Judge Analisa Torres stated that extraordinary circumstances need to be shown to modify the final judgment.
A federal judge recently dismissed a joint appeal filed by the SEC and Ripple Labs to approve a settlement that would have significantly lowered Ripple’s $125 million civil penalty and removed an existing court injunction against future securities violations.
In her ruling dated May 15, US District Judge Annalisa Torres refused the joint motion submitted earlier this month. This motion sought the court’s approval to modify a permanent injunction previously imposed on Ripple and to slash the civil penalty from $125 million to $50 million.
This action seemed to be part of a broader effort to resolve a protracted legal dispute over alleged securities law infringements. The initial penalty was set after the court ruled that Ripple had engaged in securities law violations by selling unregistered securities to institutional investors.
In her order, Judge Torres pointed out that the request was improperly filed. It was framed as a motion for settlement approval but essentially asked for relief from the final ruling made in August 2024.
To justify such relief, the request needed to comply with Rule 60, which identifies much stricter legal standards requiring “exceptional circumstances.”
“By framing their motions as settlement approval, the parties overlooked the substantial challenges they would need to overcome to vacate the injunction and substantially reduce the civil penalties. Relief under Rule 60 is only permissible under exceptional situations,” the order stated.
Judge Torres indicated that the parties either neglected to reference Rule 60 or failed to satisfy its stringent requirements.
With the proposed settlement rejected, Ripple is still bound by the ruling from August 2024, which concluded that the agency’s XRP sales were an unregistered securities offering, thus imposing a $125 million fine and prohibiting future violations of this nature.
This rejection keeps the penalty in place, but Ripple’s Chief Legal Officer, Stuart Aldeloty, made it clear that despite the ruling, “Ripple’s victory, which is unaffected by today’s order, remains unchanged.”
Aldeloty went on to explain that the ruling focused more on “procedural issues related to dismissing Ripple’s cross-appeals,” hinting that both Ripple and the SEC are still working towards a resolution. He emphasized plans to revisit the case with the court.
Updated with comments from Ripple’s Chief Legal Officer, Stuart Aldeloty.
