US Judge Rejects SEC and Ripple’s Attempt to Settle Cryptocurrency Lawsuit
New York, June 26, 2025 – A federal judge in Manhattan has rejected a proposed settlement between the U.S. Securities and Exchange Commission (SEC) and cryptocurrency firm Ripple Labs, throwing a wrench into efforts to resolve a high-profile civil lawsuit concerning the sale of Ripple’s XRP tokens.
U.S. District Judge Analisa Torres dismissed the joint motion filed by both parties to reduce Ripple’s civil penalty to $50 million, a significant decrease from the $125 million fine originally imposed last August. The lawsuit centers on the SEC’s allegation that Ripple’s sales of XRP, considered by the agency to be unregistered securities, violated U.S. securities laws.
Background of the Case
The legal battle, which began in late 2020, focuses on whether XRP tokens should be classified and regulated as securities. In a landmark ruling in July 2023, Judge Torres determined that XRP sold on public exchanges did not legally constitute securities. However, she found that Ripple’s $728 million sales of XRP to institutional investors did meet the definition of securities transactions and thus required compliance with securities laws.
Following the ruling, both Ripple and the SEC appealed the decision. Subsequently, the two sides agreed to pursue a settlement contingent on Judge Torres vacating her permanent injunction against Ripple and approving a reduced penalty. The SEC also appears to be easing its regulatory stance on cryptocurrencies as part of a broader shift in enforcement policy.
Judge Torres’s Decision
In her Thursday ruling, Judge Torres criticized both Ripple and the SEC for attempting to sidestep the court’s injunction, which prohibits Ripple from future violations of securities laws. She emphasized that neither party holds the authority to unilaterally disregard the court’s final judgment requiring a permanent injunction and a civil penalty to prevent ongoing legal breaches.
“The parties do not have the authority to agree not to be bound by a court’s final judgment that a party violated an Act of Congress in such a manner that a permanent injunction and a civil penalty were necessary to prevent that party from violating the law again,” Judge Torres wrote.
She added that even if jurisdiction were restored to her court, she would deny efforts to vacate the injunction or to reduce the penalty. However, she indicated that both Ripple and the SEC remain free to pursue further appeals or withdraw their pending appeals if they choose.
Responses and Next Steps
Ripple’s Chief Legal Officer, Stuart Alderoty, posted on the social media platform X that the company has yet to decide on its next legal move following the decision. The SEC did not immediately provide a comment.
XRP remains the fourth-largest cryptocurrency by market capitalization, trailing behind Bitcoin, Ethereum, and Tether, according to market data provider CoinMarketCap.
Since the start of the current U.S. administration’s second term, the SEC has also ended several other high-profile civil lawsuits against major cryptocurrency exchanges, including Binance, Coinbase, and Kraken, signaling a potential shift in regulatory approaches to the crypto industry.
Case Information
The case is officially registered as SEC v. Ripple Labs Inc., U.S. District Court, Southern District of New York, No. 20-10832. —
Reporting by Jonathan Stempel in New York; Editing by Marguerita Choy
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