Ripple SEC Penalty Reduction Denied by Judge Torres

A U.S. district court has denied a joint request from Ripple and the Securities and Exchange Commission (SEC) to reduce a $125 million penalty and revisit an earlier ruling that found Ripple’s institutional sales of XRP were unregistered securities offerings. Judge Analisa Torres of the Southern District of New York rejected the agency's request for an indicative ruling that sought to dissolve a prior court order and reduce financial penalties against Ripple. The parties argued that cutting the penalty by 60% and reversing the permanent injunction would be in the public interest. However, Torres maintained that the facts and legal conclusions in her previous order still stood, and that Ripple’s approach showed a continued “willingness to push the boundaries” of the court’s earlier judgment.

The request would have allowed the lower court to alter its rulings while the case sits on appeal. But Torres pushed back, saying that Congress laid out a clear path for such changes: through the appeals process, not a mid-case reversal by the same court. Ripple and the SEC previously agreed to drop the long-running case in full. In March, the SEC abandoned its appeal, and Ripple CEO Brad Garlinghouse called the move a “resounding victory” for the company and the wider crypto sector. As part of wrapping up the case, the two sides jointly asked the court to approve a reduced penalty and release $125 million held in escrow — with $50 million going to the SEC and the remaining $75 million returned to Ripple. That request is now effectively dead unless overturned on appeal.

They argued the proposal would save time, avoid further appeals, and align with the SEC’s recent decisions in other crypto cases. “Doing so would promote efficiency… and be consistent with the SEC’s recent actions in other crypto registration cases,” the filing said. Earlier in May, Judge Torres, who has overseen the case since 2020, ruled that the joint request by Ripple and the SEC was “procedurally improper” and outside the court’s jurisdiction. The case is currently under appeal before the Second Circuit, which strips the lower court of authority to take further action. The rejected proposal sought to reduce Ripple’s penalty and lift an existing injunction imposed in August 2024. Both sides agreed to the deal and asked the court for an “indicative ruling” — a formal signal on how the court would act if the case were remanded.