In a surprising twist to one of crypto’s most high-profile legal battles, Judge Analisa Torres has officially rejected the joint settlement proposal between Ripple Labs and the U.S. Securities and Exchange Commission (SEC). While both parties had agreed to a reduced penalty and resolution, the court has shut it down — for now.
Let’s break down what happened, why it matters, and what could come next.
🧾 Quick Background: Ripple’s Legal Saga with the SEC
The SEC sued Ripple Labs back in December 2020, alleging that the company sold unregistered securities through its XRP token. After a long legal battle, Judge Torres issued a mixed ruling in July 2023, finding that while XRP is not a security when sold to the public, institutional sales did violate securities laws.
Ripple was hit with a $125 million penalty and an injunction that restricts certain future XRP sales.
🤝 The Proposed Settlement
Earlier this year, Ripple and the SEC reached a joint proposal to finalize the case:
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Reduce the penalty from $125 million to $50 million
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Remove the injunction banning Ripple from specific activities
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Refund the balance to Ripple
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Close out any remaining appeals
Both parties agreed. It seemed like a done deal — until the judge stepped in.
🛑 Why the Judge Rejected It
Judge Torres denied the joint motion due to procedural errors and lack of legal justification.
1. Wrong Legal Rule Cited
Ripple and the SEC filed their motion under Rule 62.1, which is used when a case is on appeal. However, the judge clarified that their request was effectively asking to vacate or change a final judgment, which must be done under Rule 60 — a completely different standard.
2. No “Exceptional Circumstances”
Modifying or erasing a final court ruling isn’t simple — courts require a showing of extraordinary or exceptional circumstances.
In this case, neither party even attempted to argue that — a major oversight.
📉 Immediate Impact
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The $125 million fine remains in effect
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The injunction against Ripple still stands
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The SEC’s case is technically still open
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XRP dropped to $2.42, down nearly 4% on the news
🔮 What’s Next for Ripple?
Ripple now has three options:
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Refile the motion under Rule 60 with a detailed justification
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Split the request, seeking only the reduced fine while leaving the injunction in place
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Proceed with the appeal, which could take longer and carries risk
🧠 Legal Takeaway
This episode highlights a critical truth in legal proceedings:
Even when both parties agree, a court must still uphold the law.
Courts do not simply rubber-stamp agreements. Final judgments require proper procedure and strong justification to be changed — especially when they involve public interest or regulatory enforcement.
🧾 Conclusion: It’s Not Over Yet
Ripple and the SEC tried to end the fight with a handshake — but forgot to follow the rules. Now, Ripple must navigate carefully if it wants relief from the penalties and restrictions still in place.
The case isn’t over — but this is a powerful reminder that legal battles are won not just in strategy, but in execution.
Stay tuned.
