Federal judge denies Ripple, SEC motion for indicative ruling
Judge Analisa Torres said the parties have not demonstrated that vacating her prior ruling is in the best interest of the public
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A federal judge on Thursday denied a joint motion from the US Securities and Exchange Commission and Ripple Labs seeking to dissolve an injunction against the blockchain infrastructure company.
Ripple and the SEC in May submitted a settlement agreement to the court, requesting the judge vacate a prior ruling against Ripple and reduce its civil penalties from $125 million to $50 million. In the SEC’s initial lawsuit, it sought a $2 billion payment from Ripple.
Judge Analisa Torres, who issued the summary judgement in the case in 2023, denied the settlement proposal, citing Supreme Court precedent that judgments cannot be determined solely by private litigation between parties.
“The parties must show exceptional circumstances that outweigh the public interest or the administration of justice,” Torres wrote in the ruling. “They have not come close to doing so here.”
The implications of this case are significant, Torres added, and the SEC and Ripple cannot erase a ruling simply because they have come to a private understanding.
“The Court respects the freedom of parties to amicably resolve their disputes,” Torres wrote. “It is also true that the SEC, like any other law enforcement agency, has discretion to change course after an enforcement action is initiated.
“But 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.”
Thursday’s ruling is the latest development in a years-long legal battle between Ripple and the securities regulator. The SEC filed a suit against Ripple in December 2020, alleging the blockchain firm sold its XRP token without registration.
The court eventually sided with the SEC in part, ruling in a summary judgement that while the institutional XRP sales constituted as an unregistered securities offering, its retail sales were not.
The SEC pursued an appeal under former Chair Gary Gensler, but issued a joint motion with Ripple to pause the appeal after Gensler left the agency in January. The Second Circuit granted this motion, issuing a 60-day pause in the case while the Southern District of New York reviewed the settlement motion.
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