Judge Rejects Ripple-SEC Agreement, Upholding Full Penalty and Legal Restraints
U.S. District Judge Analisa Torres ruled on June 26 that Ripple Labs cannot dissolve a court-imposed injunction or reduce its $125 million civil penalty stemming from the sale of XRP.
The U.S. Securities and Exchange Commission (SEC) and Ripple jointly asked the court to vacate its 2024 Final Judgment, which permanently enjoined Ripple from violating Section 5 of the Securities Act. Both parties aimed to settle their ongoing appeals, proposing a significant reduction in Ripple’s penalty and elimination of the legal restraint. However, Torres dismissed the motion, emphasizing that final judgments must remain unless extraordinary circumstances justify relief. In her order, she stated:
The parties’ motion for an indicative ruling is DENIED.
Ripple had argued that the court should endorse a post-judgment settlement agreement, contingent on reducing its penalty and lifting the injunction. The SEC had originally sought nearly $1 billion but accepted a reduced amount after the court found Ripple had unlawfully sold XRP to institutional investors.
Despite Ripple’s claims of reform and intent to comply, Judge Torres found no legal basis for undoing the ruling. She explained that Ripple and the SEC can only lawfully remove the injunction and penalty through an appeal. She clarified that only an appellate court can vacate a final judgment, not a private agreement, and said the legal standard for doing so is high—one she found neither Ripple nor the SEC had met.
“The Court respects the freedom of parties to amicably resolve their disputes. It is also true that the SEC, like any other law enforcement agency, has discretion to change course after an enforcement action is initiated,” she stated. Noting that her final judgment found a violation of an Act of Congress in a manner that required a permanent injunction and civil penalty to prevent future violations, she stressed:
But the parties do not have the authority to agree not to be bound by a court’s final judgment … the parties must show exceptional circumstances that outweigh the public interest or the administration of justice … They have not come close to doing so here.
