Judge Denies SEC-Ripple Settlement, $125M Penalty Stands

A federal judge has denied a joint request by the SEC and Ripple Labs to approve a settlement that would have sharply reduced Ripple’s $125 million civil penalty and lifted a standing court injunction against future securities violations. The ruling, issued by US District Judge Analisa Torres on May 15, dismissed the joint motion filed earlier this month. The motion sought the court’s approval to dissolve a permanent injunction previously issued against Ripple and to reduce the civil penalty from $125 million to $50 million.

The move was part of an ongoing attempt to resolve their years-long legal battle over alleged securities law violations. The original penalty had been imposed after the court found that Ripple had violated the Securities Act by offering and selling unregistered securities to institutional investors. In her order, Judge Torres stated that the request was filed improperly. Although it was presented as a motion for settlement approval, it was, in fact, a request for relief from the court’s August 2024 final judgment.

Such a request must comply with Rule 60, which requires a significantly higher legal standard—specifically, a showing of “exceptional circumstances” to justify relief from a final judgment. The judge’s decision underscores the complexity and high stakes involved in the legal dispute between the SEC and Ripple Labs. The denial of the settlement request means that Ripple will continue to face the full $125 million penalty and the injunction against future securities violations.

This ruling is significant as it highlights the court’s strict adherence to procedural rules and the high bar set for modifying final judgments. It also indicates that the legal battle between the SEC and Ripple Labs is far from over, with both parties likely to continue their efforts to resolve the dispute through further legal proceedings or negotiations. The outcome of this case could have broader implications for the regulation of cryptocurrencies and the enforcement of securities laws in the digital asset space.