Judge Torres Denies SEC and Ripple Settlement Motion Citing Procedural Impropriety in XRP Lawsuit

A New York federal judge overseeing the Securities and Exchange Commission's (SEC) enforcement case against Ripple Labs has denied a joint motion from both parties seeking an indicative ruling or settlement in the ongoing lawsuit.

A New York federal judge has shot down a joint motion by the Securities and Exchange Commission (SEC) and Ripple Labs to rule indicatively or settle their lawsuit, Judge Torres said in a ruling on Wednesday.

Judge Torres also refused to signal any reconsideration of her decisions should the case be returned by a higher court, deeming it procedurally improper to present such a request in a joint motion for an indicative ruling or settlement.

This ruling does not affect Ripple’s earlier legal victories, such as the finding that its digital asset XRP is not a security. Both parties remain keen to settle the case and will be applying for an unenumerated motion to close the case, Judge Torres said.

“Despite their differing positions on the applicable legal standard, both parties are interested in settling this case and moving it toward closure,” Judge Torres said.

Both parties will be applying for an unenumerated motion to close the case, Judge Torres added.

The ruling keeps the status quo in the penalty phase of the litigation and may provide some relief to XRP holders, who have been closely following the case.

Earlier this year, Judge Torres ruled largely in favor of Ripple in a summary judgment motion, partially granting the SEC’s motion for partial summary judgment.

The SEC is appealing part of Judge Torres’s summary judgment ruling to the federal appeals court in New York.

The agency is appealing Judge Torres’s ruling that the SEC failed to provide fair notice to Ripple and other cryptocurrency companies that its token was a security.

The SEC had argued that it was not required to register its securities offerings and that its failure to do so was a technical violation.

However, Judge Torres said that the SEC had been on notice since 1939 that it needed to provide fair notice to cryptocurrency companies of the securities laws.

“Despite this lengthy period of time, the SEC did not provide any notice to cryptocurrency companies until 2018, when it began to bring enforcement actions against several companies,” Judge Torres said.

The judge added that the SEC’s actions were part of a broader pattern of “shifting the goalposts” and trying to apply the securities laws retroactively.

Judge Torres also said that the SEC’s claim that it had no obligation to register its securities offerings was “simply not credible.”

“The SEC has a statutory mandate to protect investors and maintain fair, orderly, and efficient markets,” Judge Torres said.

The judge said that the agency had a clear obligation to register any security that is sold to the public.

“The SEC cannot simply ignore this obligation because it believes that it is more important to bring enforcement actions,” Judge Torres said.

The judge’s ruling is a setback for the SEC, which has been struggling to keep pace with the rapidly evolving cryptocurrency sector.

The agency’s efforts to regulate cryptocurrencies have been met with skepticism from some members of Congress, who have accused the SEC of overstepping its bounds.

Earlier this year, a bipartisan group of lawmakers introduced legislation that would create a comprehensive framework for cryptocurrency regulation.

The bill, which is still pending, would grant the SEC broad authority to oversee cryptocurrencies, including stablecoins and decentralized finance protocols.

Lawmakers said the bill is necessary to prevent fraud and abuse in the cryptocurrency sector.

However, some critics said the bill would stifle innovation in the cryptocurrency industry.