Federal Judge Rejects Ripple and SEC Settlement Over XRP Penalty

NEW YORK, June 26 (Reuters) – A federal judge on Thursday rejected a joint motion from Ripple Labs and the U.S. Securities and Exchange Commission to approve a $50 million settlement related to the sale of unregistered securities.

U.S. District Judge Analisa Torres in Manhattan expressed disapproval for both parties during the hearing, stating that their March proposal did not absolve Ripple from complying with her previous injunction against violating the law.

Ripple’s chief legal officer, Stuart Alderoty, announced on social media platform X that the company has yet to decide on its next legal steps. An SEC spokesperson declined to comment on the ruling.

The case centers on the XRP token, which has become one of the SEC’s most notable cryptocurrency cases. In a July 2023 ruling, Judge Torres determined that while XRP sales on public exchanges did not qualify as securities, Ripple’s $728 million in XRP sales to institutional investors should have been compliant with securities laws.

Ripple and the SEC had appealed that decision but indicated a desire to settle if the judge would lift her injunction and reduce the civil penalty from the originally mandated $125 million to $50 million.

Judge Torres pointed out that the parties failed to demonstrate any exceptional circumstances that would justify the settlement, emphasizing that they do not have the authority to bypass a court’s ruling regarding violations of federal law.

The ruling stated, “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…”

Although both Ripple and the SEC maintain the right to withdraw their appeals or challenge the injunction, Judge Torres urged that proper legal channels must be followed for any adjustments to the court’s ruling.

XRP currently ranks as the fourth-largest cryptocurrency by market cap, after Bitcoin, Ethereum, and Tether, as per CoinMarketCap. The judge reiterated the importance of final court decisions in enforcing laws that protect investors.