US Judge Rejects Joint Settlement Motion by SEC and Ripple in High-Profile Crypto Lawsuit
June 26, 2025 – New York — A federal judge in Manhattan on Thursday declined a rare joint settlement proposal from the U.S. Securities and Exchange Commission (SEC) and Ripple Labs, the cryptocurrency firm behind the XRP token, aimed at resolving a long-running civil lawsuit concerning the alleged sale of unregistered securities.
U.S. District Judge Analisa Torres dismissed the companies’ bid to reduce Ripple’s $125 million fine to $50 million and to lift a permanent injunction barring the company from violating securities laws. The case has been one of the most closely watched regulatory battles in the cryptocurrency industry.
Background of the Lawsuit
The SEC initiated the lawsuit against Ripple in late 2020, accusing the company of conducting an unregistered securities offering through sales of its XRP tokens. While Ripple’s XRP cryptocurrency is among the largest globally by market capitalization, with a significant trading presence, the SEC’s enforcement action was aimed at allegations that Ripple had failed to comply with securities registration requirements for some of its institutional sales.
In July 2023, Judge Torres ruled that XRP transactions on public exchanges did not constitute securities sales under the law. However, she found that approximately $728 million of XRP sold directly to institutional investors was subject to securities regulations and that Ripple should have registered these transactions accordingly.
Following the ruling, Ripple and the SEC each filed appeals and simultaneously announced last month that they had reached a tentative agreement to settle the case if the court would vacate the injunction and permit a reduced civil penalty.
Judge’s Rejection of Settlement
Despite the joint request, Judge Torres reprimanded both parties, emphasizing that neither side has the authority to circumvent the court’s final judgment. She underscored that the permanent injunction is a necessary enforcement tool to prevent future violations of securities law.
“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,” Torres wrote.
She further stated that even if the court’s jurisdiction were reinstated, she would deny the request to vacate the injunction and reduce the penalty, given the absence of exceptional circumstances that would justify such relief.
Next Steps for Ripple and SEC
Ripple’s Chief Legal Officer, Stuart Alderoty, posted on the social media platform X that the company has yet to determine its next legal actions. The SEC did not provide an immediate comment regarding the rejection.
The judge noted that both Ripple and the SEC remain free to withdraw their appeals or continue to contest the injunction in higher courts.
This case occurs against a broader backdrop of shifting regulatory approaches towards cryptocurrencies under the current U.S. administration. Since President Donald Trump’s second term, the SEC has ended several civil lawsuits against major crypto exchanges including Binance, Coinbase, and Kraken, signaling a potential easing in enforcement intensity.
Significance for the Crypto Industry
XRP ranks as the fourth-largest cryptocurrency by market cap, trailing only Bitcoin, Ethereum, and Tether, according to CoinMarketCap data.
This ruling and the court’s refusal to approve the settlement send a clear message about judicial scrutiny of crypto-related enforcement settlements. It also highlights the evolving legal landscape for digital assets and the delicate balance between regulatory oversight and industry innovation.
The lawsuit—officially titled SEC v. Ripple Labs Inc., No. 20-10832, in the Southern District of New York—remains a bellwether for how cryptocurrencies might be regulated in the United States moving forward.
Reporting by Jonathan Stempel in New York; editing by Marguerita Choy
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