Judge Rejects Settlement Proposed by Ripple and SEC

A federal judge reportedly rejected a joint motion by blockchain company Ripple and the Securities and Exchange Commission (SEC) to approve their proposed settlement in a lawsuit over the sale of unregistered securities.

The judge said the two parties had “not come close” to showing that the settlement was justified, Reuters reported Thursday (June 26).

The case involves Ripple’s sales of the XRP token and the judge’s July 2023 ruling that while Ripple’s sales of XRP on public exchanges did not meet the legal definition of a security, its sales to institutional investors should have complied with securities laws, according to the report.

Ripple and the SEC appealed that decision but agreed to settle if the judge set aside her permanent injunction against violating the law that was imposed on Ripple and approved lowering the $125 million fine she imposed in August to $50 million, the report said.

The judge rejected the joint motion, saying, per the report: “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.”

SEC and Ripple can choose to withdraw their appeals or to appeal the injunction, the judge said, according to the report.

Ripple CEO Brad Garlinghouse said in March that the SEC had dropped its case against the blockchain company. He added that the move was “a resounding victory for Ripple, for crypto, every way you look at it.”

The SEC filed the lawsuit in December 2020, alleging that the company conducted a $1.3 billion unregistered securities offering.

The judge’s ruling that XRP was covered by securities laws only when it was sold to institutional investors was handed down in June 2023.

In August 2024, a judge ordered Ripple to pay a civil penalty of $125 million, a figure that was below the $2 billion sought by the SEC.

The SEC said it would appeal that ruling, but then Washington’s attitudes toward the crypto sector shifted after the inauguration of President Donald Trump.