XRP News Today: Judge Denies Ripple SEC Settlement Motion, Stalling Legal Process

Judge Analisa Torres has denied a joint motion from Ripple and the Securities and Exchange Commission (SEC) to amend the final ruling in their ongoing legal battle. This decision has effectively stalled the settlement process, leaving both parties in a state of legal uncertainty. The denial comes after a series of procedural attempts by both parties to finalize their settlement agreement, which was signed by Ripple on April 23 and by the SEC on May 8. The parties had jointly requested a 60-day pause on their respective appeals and sought an indicative ruling from Judge Torres to modify the court’s earlier decision. However, their first motion was denied due to a procedural error, and a second, corrected motion filed on June 12 was also denied by the judge.

Legal commentators, such as Bill Morgan, have noted that the failure to obtain the necessary court approval has effectively stalled the settlement process. The motion that Judge Torres rejected proposed lowering Ripple’s financial penalty from $125 million to $50 million and removing the court’s prohibition restricting the company’s further sales to institutions. In her ruling, Judge Torres emphasized that the court’s role in protecting public interest and upholding justice outweighs the parties’ agreement. She stated that the parties had not demonstrated exceptional circumstances that would warrant nullifying a final judgment that had found Ripple in violation of the law.

With no court approval of the settlement, the parties now face a decision: to move forward with their appeals, negotiate new terms, or consider alternative legal options. Ripple Chief Legal Officer Stuart Alderoty acknowledged the ruling and said the company is still evaluating its next steps. The SEC has not issued a formal response. The case, filed in 2020, remains one of the SEC’s most high-profile actions involving digital assets. The SEC has dismissed cases against other major players in the crypto industry, but Ripple’s case has been challenging to resolve as it reached a final judgment in August 2024.

The rejection of the settlement motion has sparked renewed interest in the control of Ripple's XRP tokens, particularly the 37 billion XRP held in escrow. Legal experts, developers, and analysts are debating whether Ripple truly relinquishes authority over these funds. Some commentators have suggested that the U.S. government could intervene or even take control of the escrowed XRP. This speculation is fueled by the court's stance on the injunction and the federal penalty imposed on Ripple. Ripple created the escrow accounts in 2017, locking up 55 billion XRP to ensure predictable token releases. Each month, one billion XRP becomes eligible for release, with unused portions returned to escrow.

XRPL developer Mayukha Vadari has stated that the XRPL protocol, not Ripple, fully manages the system, and that Ripple does not actively control the funds or have access to them before the unlock time. However, critics argue that while Ripple cannot move the funds at will, it remains the ultimate beneficiary. Daniel Keller, CTO of Eminence, has questioned the premise that technical restrictions erase ownership responsibilities. He has pointed to court documents and on-chain data, claiming they support his position that the escrow belongs to Ripple and they manage it. Vadari acknowledged that legally, the funds may be attributed to Ripple, but emphasized that XRP cannot be accessed or spent until the predetermined conditions are met, due to XRPL’s rules.

The potential for the U.S. government to take control of Ripple’s escrowed XRP has also been discussed. An XRPL validator proposed that the government could take control of the escrowed funds by reassigning the regular key of the escrow-holding accounts to a government-controlled address. This action would grant the government full authority over the escrowed funds and could be executed through a single XRPL transaction. The settlement reached between Ripple and the SEC, where Ripple was to remit $50 million to the SEC while retaining $75 million in escrowed funds, now hangs precariously. The next major update in the case is expected in August, amid growing settlement speculation. The outcome of this legal battle will have significant implications for the crypto community and the future of XRP.