Court Denies SEC, Ripple Settlement Motion After Finding Procedural Misstep

Under the proposal, Ripple would pay the SEC $50 million, with the remaining funds returned to the company. The SEC stated that the plan reflected its current enforcement priorities, with no intention to establish precedent. These steps were part of the regulator’s efforts to settle its long-standing legal battle with Ripple.

Judge Torres ruled that the parties’ request failed to follow the proper procedure under federal rules. Instead of seeking relief under Rule 60 of the Federal Rules of Civil Procedure, which governs post-judgment relief, the parties styled the filing as a request for “settlement approval,” citing SEC v. Citigroup Global Markets to argue that the proposed decree was fair and reasonable. Torres found this framing inapplicable to the post-judgment context and noted that the parties did not meet the legal standard required to vacate the earlier ruling or reduce the penalty.

The order stated that “their request does not even mention the Rule.” Judge Torres emphasized that Rule 60 requires showing exceptional circumstances, which the parties had not attempted to demonstrate. She added that it would deny the motion even if the jurisdiction were restored. Ripple’s chief legal officer, Stuart Alderoty, said the court’s ruling does not change the decisions favoring Ripple.

He added: “This is about procedural concerns with the dismissal of Ripple’s cross-appeal. Ripple and the SEC are fully in agreement to resolve this case and will revisit this issue with the Court, together. Crypto attorney Fred Rispoli commented on social media that the denial reflects a technical misstep, not a ruling against settlement itself. 

He added: “The meaning here is that the parties didn’t request relief under the right rule of civil procedure. So they will refile it under the correct rule but, me reading between the lines, is that Ripple and the SEC need to get on all fours and beg for relief.” Rispoli further interpreted the court’s tone as frustration with the procedural deficiency, suggesting the judge views it as a waste of time. 

He added that the lawyers did not file the motion incorrectly but rather opted for the “easy way” and hoped Judge Torres would agree. Yet, Rispoli said the judge will make the lawyers “do the work now.” “By styling their motion as one for ‘settlement approval,’ the parties fail to address the heavy burden they must overcome to vacate the injunction and substantially reduce the Civil Penalty.”

He advised that the SEC and Ripple now need to file a detailed motion under Rule 60 for approval, detailing the other cases being dropped with declarations from Commissioners and describing the SEC’s failure to do any meaningful work on crypto guidance. Rispoli estimated that such a filing would take two to three weeks to prepare, and the court’s decision is expected to take another week or two after submission. The case, filed in December 2020, alleged that Ripple conducted unregistered securities offerings through its sales of XRP. It also named Ripple executives Brad Garlinghouse and Chris Larsen as co-defendants. 

In July 2023, Judge Torres issued a mixed ruling, finding that Ripple’s institutional XRP sales violated federal securities law but programmatic sales on secondary markets did not. The court later issued a final judgment in August 2024, imposing a $125 million civil penalty and enjoining Ripple from further violations. Both the SEC and Ripple appealed the decision to the Second Circuit. The SEC filed its appellate brief in January 2025, and the parties jointly moved to suspend the proceedings in April, citing an agreement in principle to resolve the case.

The May 8 motion intended to facilitate the next procedural step: an indicative ruling from the district court. This ruling would allow the parties to seek a limited remand from the Second Circuit and formally present the proposed relief to Judge Torres.  Instead, the SEC and Ripple must decide whether to revise their motion and proceed through the appropriate channels to finalize a settlement and close the four-year litigation.