Judge Tosses SEC-Ripple Settlement: Court Battle to Continue

Key Insights

• Ripple Labs and the Securities and Exchange Commission filed a joint motion to dismiss the ongoing legal battle from 2020.
• However, US district judge Analisa Torres has thrown the case out based on “Procedural missteps” from both parties.
• According to pro-Ripple lawyer Stuart Alderoty, this doesn’t necessarily mean that the case will drag on for longer.
• The case is merely stuck on technical difficulties, and Judge Torres expects both parties to file proper motions before dismissal.

The years-long legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) continues to drag on.

Recently, U.S. District Judge Analisa Torres rejected a joint motion from both parties, in which they sought an “indicative ruling” that would have helped bring the case to a close.

According to Torres, the motion was denied because of certain “Procedural missteps”

As it stands, this new development has thrown a wrench into all efforts to put the case to rest:

And both parties have to continue hashing things out in court.

Why Judge Torres Rejected the Motion

On 15 May, Judge Torres issued a decision denying a joint request from Ripple and the SEC.

As mentioned earlier, both parties sought her approval to dissolve parts of the original judgment, including a $125 million civil penalty and an injunction that restricted certain XRP token sales.

Both parties filed the motion in the hopes of settling the matter with Ripple paying only $50 million.

However, Judge Torres found the motion "procedurally improper."

According to her, the defendants as well as the plaintiffs failed to follow the correct legal framework under Federal Rule of Civil Procedure 60.

She says that instead of demonstrating “exceptional circumstances” as required by Rule 60, the SEC and Ripple framed their motion as a request for settlement approval.

For context, this was something the court found inappropriate in a post-judgment context.

“Their request does not even mention the Rule,” Torres noted in her order.

She added that even if jurisdiction returned to her court from the appeals process, she would still deny the motion.

The Case That Refuses To Die

This development doesn’t completely shut down the possibility of a settlement though.

It simply means that Ripple and the SEC need to try again, this time by properly filing under Rule 60.

According to Ripple’s Chief Legal Officer, Stuart Alderoty, the court’s decision is not a reversal of any of Ripple’s earlier victories.

In fact, Judge Torres' July 2023 ruling that XRP is not a security when traded on secondary markets still stands.

“This is about procedural concerns with the dismissal of Ripple’s cross-appeal,” Alderoty said on Twitter (now X).

Crypto lawyer Fred Rispoli also weighed in and mentioned that the denial was more related to a technical error than an outright rejection.

He pointed out that the SEC and Ripple opted for what seemed like an easier route, and were hoping Judge Torres would go along with it.

“She’s making them do the work now,” he added.

The crypto market has responded to the news so far, with XRP’s price dropping by more than 3% over the last 24 hours after the announcement.

This is surprising, considering how the cryptocurrency had been up by more than 10% over the last month.

For investors, this settlement would have turned out to be a major settlement to Ripple’s legal woes and a possible turning point for XRP’s future.

However, Judge Torres’ rejection turned out to be the opposite, with uncertainty once again muddying the waters.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.