A New York judge has decisively rejected a joint petition from the U.S. Securities and Exchange Commission (SEC) and Ripple Labs, quashing hopes for a settlement that sought to reduce Ripple’s civil penalty to $50 million and lift a permanent injunction against the company. The ruling, handed down by District Judge Analisa Torres of the Southern District of New York, underscores the ongoing tension between regulatory enforcement and evolving crypto-market dynamics.
Judge Torres Holds Firm
Judge Torres’ refusal to budge on the permanent injunction is not about the money—it’s the principle of the thing. While the proposed $50 million penalty is a significant reduction from the original $125 million slapped on Ripple last year, it’s the attempt to dissolve the injunction that Torres finds objectionable. In her ruling, she emphasized that the injunction was warranted due to “the enormous sums of money Ripple made in violation of the law” and the potential for future infractions.
In her words, the court’s prior imposition of the injunction was based on a “reasonable probability” of future violations—an assessment that remains unchanged. “Indeed, if the Court should not be concerned about Ripple violating the law, why do the parties want to eliminate the injunction that tells Ripple, ‘Follow the law’?” Torres pondered, leaving no room for ambiguity in her skepticism.
Changing Guard, Changing Tactics?
This decision comes amid a sea change at the SEC following the election of President Donald Trump in January. The departure of former SEC Chair Gary Gensler paved the way for a seemingly more crypto-friendly posture, spearheaded by Commissioner Hester Peirce. The newly minted Crypto Task Force has been busy, dropping investigations and easing pressure on crypto firms. Yet, as Torres pointed out, many of these cases were dismissed before any court confirmed a violation. This pattern of dropped cases is part of a broader trend, as discussed in our recent analysis of crypto-related court cases.
Corey Frayer, director of investor protection at the Consumer Federation of America, voiced concerns over the SEC’s recent maneuvers. “Regardless of leadership changes, the SEC has avoided whipsawing between arguments in ongoing litigation to protect the agency’s credibility,” he noted. Still, he warned, “In granting favors to crypto companies, SEC leadership has chosen to tarnish a 90-year reputation the agency carefully built.”
A Stubborn Standoff
This marks the SEC’s second attempt to secure an indicative ruling—essentially a judicial sneak peek—on this matter. Just last month, Torres dismissed a similar request, citing jurisdictional and procedural shortcomings. Yet, Ripple and the SEC returned with an expanded plea, asserting “exceptional circumstances” that allegedly warranted revisiting Torres’ final judgment.
Torres, however, remained unswayed. She acknowledged the SEC’s discretion in altering its stance post-enforcement but underscored that both parties lacked the authority to sidestep a court’s final judgment without demonstrating exceptional circumstances that “outweigh the public interest or the administration of justice.” In her view, they fell short.
If the parties genuinely wish to conclude this legal saga, Torres offered two alternatives: withdraw their ongoing appeals or pursue an appeal. “Neither option involves requiring this Court to absolve Ripple of its obligations under the law,” she concluded with a touch of finality.
What Lies Ahead?
The ruling raises questions about the future of Ripple and the SEC’s regulatory trajectory. Will the SEC’s softened stance under new leadership hold, or will this setback prompt a recalibration? The crypto market, ever-volatile, watches with bated breath as Ripple’s legal battles continue to unfold. The implications of this decision could ripple through the industry, influencing regulatory approaches and corporate strategies alike. For a deeper dive into how regulatory changes are shaping the crypto landscape, see our coverage of SEC Thailand’s public consultation on crypto listing criteria.
As the drama unfolds, one thing remains clear: the intersection of crypto and regulation is as contentious as ever. In this dynamic dance, the next move could be pivotal. Whether Ripple and the SEC choose to withdraw or appeal, the resolution of this case will be keenly watched by industry insiders and regulatory bodies worldwide. It’s a waiting game, and only time will tell how this chapter concludes.
Source
This article is based on: NY Judge Slaps Down SEC, Ripple’s Second Request for an Indicative Ruling on Proposed $50M Settlement
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
