Ripple,SEC Seek Court Approval for $125M Penalty Settlement

The U.S. Securities and Exchange Commission and Ripple Labs Inc. have jointly requested an indicative ruling from Judge Analisa Torres in the Southern District of New York. This ruling aims to dissolve the injunction imposed on Ripple and release the funds held in escrow related to the civil penalty. The filing seeks two key determinations: the dissolution of the injunction previously included in the Final Judgment against Ripple and the approval of the distribution of the $125,035,150 civil penalty, with $50 million to be paid to the SEC and the remainder returned to Ripple.

If the Court grants this indicative ruling, the parties will then move to the U.S. Court of Appeals for the Second Circuit to remand the case to the district court for the relief to be granted. Legal analyst and defense attorney James K. Filan brought this development to public attention through a tweet, stating that the SEC had filed the Settlement Agreement Letter.

Crypto lawyer Fred Rispoli noted the absence of Jorge G. Tenreiro, Chief Litigation Counsel at the SEC, from the settlement agreement. Rispoli's comment, which includes a sarcastic reference to an IT-related distraction, highlights Tenreiro’s absence from the SEC’s latest filing. Tenreiro played a central role throughout much of the SEC’s litigation against Ripple and its executives, particularly in earlier phases of the case concerning XRP’s legal classification and related enforcement actions. His name not appearing on the settlement documents suggests a reduced role in the final negotiations or a broader shift in the SEC’s internal handling of crypto asset litigation.

The joint letter also provides a procedural background leading up to this request. After the August 2024 Final Judgment imposed a $125 million penalty on Ripple and included an injunction related to violations of the Securities Act of 1933, the Court later stayed enforcement of the monetary penalty in September 2024. Ripple was ordered to deposit the penalty into an interest-bearing account pending appeal. The appeals remain active in the Second Circuit under cases Nos. 24-2648 and 24-2705(XAP), with the SEC and Ripple having filed respective notices of appeal and cross-appeal in October 2024.

According to the settlement terms described in the May 8 filing, $50 million would be paid to the SEC in satisfaction of the penalty, and the rest returned to Ripple. This agreement effectively resolves the monetary penalty dispute contingent upon the Court’s approval. The final disposition of the matter now depends on whether Judge Torres will issue the indicative ruling the parties seek. The case has been closely monitored due to its implications for digital asset regulation and enforcement in the United States.

Rispoli’s comment, while humorous, underscores attention on personnel developments at the SEC as the agency appears to move toward concluding one of the most significant enforcement actions in the crypto sector to date. The absence of Tenreiro from the settlement agreement suggests a potential shift in the SEC’s approach to crypto asset litigation, which could have broader implications for future regulatory actions in the digital asset space.