Simply put
- The SEC and Ripple have made a joint request to address the injunction and release the funds held in escrow.
- The proposed settlement involves Ripple paying $50 million to the SEC, with the remaining amount returned to Ripple.
- This matter traces back to 2020, centering on allegations that XRP sales were unregistered securities.
In a recent filing in the Southern District of New York, both the Securities and Exchange Commission and Ripple sought assistance from a federal court in Manhattan to end the injunction and release the $125 million currently in escrow.
According to the proposal, Ripple would pay the SEC a $50 million civil penalty, with the rest of the funds going back to the company. It seems this step, while significant, would take almost four more years to finalize, which is something that has raised various concerns in multiple sectors.
The joint request builds on prior attempts by both parties to pause the ongoing appeal and work towards a resolution. This request still requires approval from US District Judge Annalisa Torres.
The SEC’s lawsuit from 2020 accused Ripple of generating $1.3 billion through sales of XRP without registering it as a security.
Ripple has consistently denied any wrongdoing and achieved a partial legal win in 2023 when Judge Torres ruled that XRP’s programmatic sales to retail buyers did not amount to a securities offering. However, the court did find Ripple at fault for its institutional sales.
Following that ruling, the SEC initially demanded a $2 billion penalty, which was later reduced to $125 million. The proposed agreement indicates that Ripple and its executives would pay $50 million, with the balance reverting back to Ripple. The SEC consented to this arrangement with new leadership in place.
The move coincides with a shift in the SEC’s strategy since President Donald Trump took office, moving away from the more aggressive enforcement that characterized the tenure of former President Joe Biden.
Several notable lawsuits and investigations initiated by previous chairman Gary Gensler have been dropped since this policy shift.
In May, SEC Commissioner Caroline Clenshaw pointed out that the agency’s retreat in its stance on cryptocurrency could put investors at risk.
Judge Torres had previously rejected a motion for a suggested ruling on the settlement, citing procedural issues related to the pending appeal in the Second Circuit, which led both sides to file for a suspension of these appeals.
XRP dropped by 5.2% on Thursday, trading at $2.13, based on data from Coingecko.
