Ripple's $50M Settlement Denied by Judge Torres Due to Procedural Error

Judge Analisa Torres has denied a joint request from Ripple and the U.S. Securities and Exchange Commission (SEC) to finalize a proposed $50 million settlement. This decision leaves Ripple’s previously assessed $125 million penalty intact and maintains an existing injunction against the company. Both parties had agreed to the terms of the revised settlement, but the court ultimately rejected their filing due to a procedural misstep.

The proposed agreement sought to reduce Ripple’s penalty from $125 million to $50 million, eliminate the injunction barring Ripple from future violations of securities laws, refund the remaining balance to the company, and terminate any further appeals. This approach was intended to bring closure to the lengthy and high-profile litigation.

Judge Torres denied the request on procedural grounds. The parties submitted their joint motion under Federal Rule of Civil Procedure 62.1, which applies to cases on appeal and where the court may state whether it would grant a motion if jurisdiction were restored. The judge noted that this was the incorrect procedural avenue, as the relief requested—vacating a final judgment—should have been brought under Rule 60 instead. Rule 60 deals specifically with modifying or relieving a party from a final judgment, and its use requires a showing of exceptional circumstances, which was not addressed in the joint filing.

The denial was not based on the substance of the proposed agreement but rather on the failure to follow the appropriate legal mechanism. Judge Torres emphasized that courts do not routinely reverse final rulings merely because both sides agree. The judiciary requires a rigorous justification to vacate judgments or remove injunctions. In this case, Ripple and the SEC did not invoke Rule 60 and provided no argument establishing exceptional circumstances that would justify the court reversing its previous order.

The SEC’s case against Ripple remains technically active. The company faces the full $125 million penalty, and the injunction blocking Ripple from certain actions remains in force. Ripple now has three main options: it can refile the joint motion using the correct rule while providing a stronger legal justification, it can choose to separate the issues—such as modifying the fine while leaving the injunction in place—or it can continue with the appeals process, accepting the associated legal risks.

This incident serves as a reminder that even mutually agreed-upon resolutions between regulatory agencies and private entities are subject to strict procedural requirements in federal court. The rejection of the joint motion does not indicate that the proposed terms were inappropriate in substance, but rather that the method of filing failed to meet legal standards. The case remains open, and Ripple must now decide how to proceed in light of the court’s ruling.