Ripple’s Request Denied by U.S. District Court
On Thursday, U.S. District Court Judge Analisa Torres issued a ruling regarding a significant motion from Ripple and the Securities and Exchange Commission (SEC) in the Southern District of New York.
Previously, both parties had asked Judge Torres to lift the permanent injunction against Ripple and to reduce its financial penalty from $125 million to $50 million.
Ripple and the SEC invoked Rule 60(b), aiming for the court to release them from the final judgment based on their settlement agreement. However, the court firmly stated it wasn’t convinced by arguments seeking to amend this judgment.
The Main Reasons Behind the Denial
In her ruling, Judge Torres highlighted that the court’s decision is meant not just for the litigants but also for public interest. The law restricts Ripple and the SEC from simply reversing a court decision, only allowing it under rare circumstances.
The judge pointed out that the SEC had previously stressed the need for harsh penalties against Ripple due to “reckless” and “serious” violations over an eight-year period. The agency had claimed Ripple continued breaking the law, a fact the judge reiterated in her decision.
She remarked, “None of this has changed. The parties don’t pretend otherwise. Yet, they now claim it’s in the public’s best interest to reduce civil penalties by 60% and lift injunctions made a year ago.”
Ripple attempted to sway the judge by referencing the SEC’s shift in stance on crypto regulations, noting that the agency had dropped cases against other major firms like Coinbase and Kraken after the departure of former SEC chair Gary Gensler. However, Judge Torres pointed out that there were no actual injunctions or penalties involved in those cases.
The decision states, “The court has not been persuaded. None of the enforcement actions mentioned involve an injunction or civil penalty. In each instance, the SEC dropped cases before any violations of federal securities laws were confirmed.”
The judge expressed her concern regarding the integrity of the final decision to back the ruling. In 2023, the court established that Ripple violated securities laws by selling XRP to institutional investors without adequate registration. In August 2024, the court finalized its ruling, imposing a $125 million penalty and an injunction restricting Ripple from selling XRP to U.S. institutional clients.
Both the SEC and Ripple filed appeals in October, which were followed by Gensler’s exit and a settlement reached earlier this year.
What Happens Next?
According to legal expert Bill Morgan, the recent denial of moves is quite significant. A refusal could mean the appeal process will carry on, prolonging the case. Yet, earlier this week, he expressed that it might be more sensible for Ripple to accept the penalties and permanent injunction.
XRP’s value has dropped by approximately 1.6% in the last 24 hours.
