Ripple’s Push to Resolve SEC Showdown Hits Judicial Wall

In the latest twist to a saga that has kept the digital-asset world on edge for nearly half a decade, U.S. District Judge Analisa Torres has refused to rubber-stamp a surprise compromise between Ripple Labs and the Securities and Exchange Commission (SEC). The two sides had jointly asked the court to bless a trimmed-down, $50 million settlement and to lift a standing injunction that bars Ripple from selling XRP in ways that violate federal securities law. Torres’s answer, delivered from her Manhattan courtroom on Thursday, was an unequivocal “no.”

A Deal Too Convenient for the Court

Ripple and the SEC framed their proposal as a sensible, forward-looking resolution: end the litigation, slash the penalty from the original $125 million to $50 million, and let both parties move on. But Judge Torres pushed back, reminding them that courts—rather than litigants—decide when a permanent injunction can be erased.

“In effect,” she wrote, “the parties request permission to ignore a final judgment of this Court.” That, she added, would undermine the public’s interest in consistent enforcement of laws enacted by Congress. Unless Ripple and the SEC can demonstrate truly “exceptional circumstances,” the injunction remains in force, as does the logic behind the stiffer penalty.

The opinion is a blow to both camps. For Ripple, it extends an expensive legal cloud that has hovered since late 2020, when the SEC first alleged that $1.3 billion in XRP sales were unregistered securities offerings. For the Commission—whose enforcement strategy under Chair Gary Gensler has recently softened following leadership changes in Washington—the ruling signals that negotiated settlements still face rigorous judicial scrutiny.

How We Got Here

• December 2020: The SEC sues Ripple, CEO Brad Garlinghouse, and co-founder Chris Larsen, claiming XRP was sold in violation of securities laws.

• July 2023: Judge Torres splits the baby. She rules that programmatic sales of XRP on public exchanges do not meet the Howey test for securities—but that $728 million in institutional sales do.

• August 2024: The court levies a $125 million civil penalty and imposes a permanent injunction, instructing Ripple to avoid future violations.

• March 2025: Both sides, eyeing lengthy appeals, float a joint motion: Ripple will accept a reduced $50 million fine if the injunction is vacated.

• June 26 2025: Judge Torres declines.

That timeline underscores the unprecedented nature of Thursday’s motion. “It is rare for plaintiffs and defendants to try to erase an injunction they only just agreed to appeal,” notes Thomas Richards, a former SEC trial lawyer who now advises blockchain startups. “Courts see injunctions as critical safeguards, not bargaining chips.”

Market Reaction: XRP Holds Ground

Despite the courtroom setback, XRP—currently the world’s fourth-largest cryptocurrency by market capitalization—showed resilience. Prices slipped modestly following the ruling but quickly stabilized as traders digested the limited near-term impact on retail exchange flows. The token continues to trade freely on most global platforms, having regained listings over the past two years when Torres’s 2023 decision clarified that ordinary exchange sales were not securities transactions.

Long-term, however, Ripple’s ambitions to court large institutional partners could remain constrained. “A live injunction complicates any pitch to banks or payment networks,” says fintech analyst Maria Lei of Blockview Research. “They need absolute certainty that future XRP distributions won’t trigger another enforcement wave.”

What Happens Next?

Judge Torres left the parties three avenues:

1. Withdraw Their Appeals – Ripple and the SEC could abandon pending appeals and live with the original judgment.

2. Continue Appealing – They can press on at the Second Circuit, which would review Torres’s July 2023 split decision and the subsequent penalty.

3. Renegotiate—with Evidence – They could return to Torres armed with data or legal arguments demonstrating why the injunction no longer serves the public interest.

Ripple’s chief legal officer, Stuart Alderoty, was noncommittal on Thursday, posting on X (formerly Twitter) that the company is “reviewing options.” The SEC offered no immediate statement, though recent agency trends suggest a growing appetite to close the book on legacy crypto cases.

Broader Regulatory Ripples

The stand-off arrives at a moment when federal oversight of digital assets is in flux. Since President Donald Trump began his second term, the SEC has quietly wound down high-profile lawsuits against Coinbase, Kraken, and even Binance’s U.S. affiliate. Industry lobbyists interpreted those moves as signals of a more pragmatic stance—one focused on stablecoins and consumer protection rather than sweeping securities claims.

Torres’s ruling complicates that narrative. By emphasizing the judiciary’s gatekeeper role, it reminds regulators and crypto firms alike that negotiated settlements must still align with statutory mandates and past court findings. The decision may also influence how other judges evaluate consent decrees in ongoing token cases, including those involving Solana and Polygon.

The Takeaway for Investors and Exchanges

For everyday crypto traders, Thursday’s order does not instantly change how XRP is bought or sold on public exchanges. Yet it prolongs uncertainty around Ripple’s enterprise strategy, potentially slowing large-scale adoption of its On-Demand Liquidity (ODL) service among banks. Exchanges that delisted XRP during the early days of the lawsuit are unlikely to reverse course again until the appeals process—or a new, court-approved settlement—concludes.

Meanwhile, the message from Judge Torres is unmistakable: even when adversaries become allies, the rule of law remains the final arbiter in America’s evolving crypto landscape.