Ruling rejects Ripple's request for softer penalty in ongoing SEC lawsuit
In a recent ruling, a federal judge has denied Ripple's motion to reduce its $125 million civil penalty in the ongoing case against the Securities and Exchange Commission (SEC). The decision underscores the stringent judicial control over enforcement outcomes in U.S. securities law.
The case, which began in December 2020, saw the SEC accuse Ripple of selling XRP as unregistered securities offerings. In 2024, Judge Analisa Torres imposed a $125 million civil penalty on Ripple and a permanent injunction, finding that Ripple's institutional sales of XRP violated securities laws.
In 2025, Ripple and the SEC jointly sought to reduce the penalty to $50 million and vacate the injunction. However, Judge Torres denied this request, emphasising that parties do not have the authority to override a court’s final judgment on statutory violations simply by agreement. She noted that under Federal Rule of Civil Procedure 60, which allows relief from a final judgment, the parties must demonstrate “exceptional circumstances” to justify such a change. The judge concluded that no such circumstances were shown, and therefore the injunction and the original penalty remained in place.
Fred Rispoli, an attorney and founder of HODL Law, interpreted the judge’s decision as indicating that the parties may need to "beg" for relief. Ripple's Chief Legal Officer, Stu Alderoty, maintained confidence that the settlement would work out, and both parties are expected to revisit the issue of the penalty with the court.
The judge's order did not affect Ripple's previous wins, such as XRP not being classified as a security in some instances. However, it does highlight the importance of meeting strict judicial oversight and criteria to vacate or modify civil penalties, particularly in the Ripple vs. SEC settlement context.
The SEC had initially sought nearly $2 billion in penalties in the case against Ripple. In July 2023, Judge Torres gave Ripple and the agency a partial win, ruling that the sale of Ripple's token, XRP, on public exchanges did not violate federal securities laws.
Judge Torres' order did not indicate that the parties should not waste her time with another ruling, but she did indicate that the next filing should be filled with reasons why she should grant it. James Filan, a former federal prosecutor, wrote that the case can only be resolved after Torres agrees to the settlement, followed by a limited remand back to her court.
Lyra Bytes, a New Zealand-based founder of DualHelix Capital, expressed concern about the "heavy burden" mentioned in the judge's decision. Another motion would need to be filed for the agreed settlement if the Second Circuit Court of Appeals grants the limited remand.
The SEC would keep $50 million of the released penalty, while the rest would be returned to Ripple. Rispoli expects the SEC and Ripple to refile their motion soon, filled with reasons why Torres should grant it. The final resolution of the case, which has been ongoing for nearly five years, remains to be seen.
- The ongoing case between Ripple and the Securities and Exchange Commission (SEC) involves disputes over business transactions, specifically the sale of XRP, which was classified as unregistered securities offerings.
- In their efforts to reduce the $125 million civil penalty and modify the injunction, both Ripple and the SEC have acknowledged the importance of finance matters in theirNegotiations, especially in light of the judge's decision emphasizing strict judicial oversight and criteria before vacating or modifying civil penalties.
