Ripple and SEC Seek Final Ruling on $125 Million Fine to Conclude Long-Running Legal Battle

On June 12, the U.S. Securities and Exchange Commission (SEC) and Ripple Labs jointly filed court documents requesting a final ruling on a $125 million penalty, aiming to resolve a legal saga that has spanned nearly five years. The filing reflects a mutual desire to conclude the high-profile case, which has been a focal point in the cryptocurrency industry since the SEC first accused Ripple of violating securities laws through its XRP token sales. Both parties referenced a significant shift in the SEC’s regulatory stance toward cryptocurrencies, suggesting an evolving landscape that could influence the case’s outcome.

Background of the SEC vs. Ripple Case

The legal battle began in December 2020 when the SEC filed a lawsuit against Ripple Labs, alleging that the company raised over $1.3 billion through unregistered securities offerings by selling XRP to institutional and retail investors. The SEC argued that XRP should be classified as a security, subjecting its sales to stricter regulatory oversight. Ripple, however, maintained that XRP is a cryptocurrency used for cross-border payments, not a security, and cited prior SEC statements to support its position.

In July 2023, Judge Analisa Torres ruled that XRP programmatic sales on public exchanges did not constitute securities, as retail buyers lacked a direct relationship with Ripple or an expectation of profit tied to its efforts. However, she found that $728 million in institutional XRP sales violated securities laws, resulting in a $125 million penalty. The SEC appealed the non-security ruling for programmatic sales, while Ripple appealed the institutional sales penalty.

Recent Developments and Regulatory Shifts

In March, Ripple and the SEC reached a preliminary settlement. Ripple agreed to pay a $50 million fine, significantly lower than the SEC's initial demand of $125 million, with the remaining funds, $75 million, to be returned to Ripple from escrow accounts. Additionally, the SEC agreed to request the court to lift the standard injunction against Ripple, allowing it to resume sales to institutional investors. The Second Circuit Court of Appeals paused the case in April, instructing the SEC to provide a status update within 60 days, leading to the settlement agreement on May 8.

The legal conflict between Ripple and the SEC has essentially concluded, with the remaining dispute focusing on the allocation of a $125 million fine. However, last month, Judge Torres rejected a district court’s request for an indicative ruling on how it would rule on a motion if it still had jurisdiction. Judge Torres stated that both parties failed to meet the “heavy burden” required to lift the injunction, adding that relief from judgment under Rule 60 of the Federal Rules of Civil Procedure should occur only in “exceptional circumstances.”

In the latest court filings submitted on June 12, attorneys for Ripple and the SEC referenced the significant shift in the SEC’s cryptocurrency regulatory stance since the appointment of new Chairman Paul Atkins. They cited this as an “exceptional circumstance” beyond the settlement agreement itself, supporting the rationale for reaching a resolution, avoiding unresolved appeals, and conserving resources for both parties.

Looking Ahead

If the settlement is ultimately approved, it will enable Ripple to further expand its U.S. operations, particularly its cross-border payment solutions, while reducing regulatory uncertainty. In the first quarter of 2025, Ripple maintained strong growth momentum. In addition to the SEC settlement, Ripple acquired prime brokerage firm Hidden Road for $1.25 billion. Hidden Road, which holds a broker-dealer license from the Financial Industry Regulatory Authority (FINRA), enhances Ripple’s ability to provide fixed-income prime brokerage services to institutional clients. This acquisition highlights Ripple’s ambition and strategy to integrate digital assets with traditional financial markets and expand its business scope.

As Ripple and the SEC await a final ruling, the resolution of this case could mark a turning point for XRP and Ripple’s operations. The company has continued to expand its cross-border payment solutions, leveraging XRP for faster and cheaper transactions. A finalized judgment could remove lingering uncertainties, potentially boosting Ripple’s partnerships and market adoption.

The case has also set precedents for how cryptocurrencies are classified under U.S. law. The 2023 ruling that XRP is not a security for retail sales on exchanges can be cited by other crypto firms facing SEC scrutiny in the future, shaping the regulatory landscape.