Ripple CLO Calms XRP Community After Court Denial: “Nothing Changes”

Ripple and the U.S. Securities and Exchange Commission (SEC) hit another legal bump this week, but it's not as dramatic as some headlines made it seem.

The U.S. judge on Monday refused to finalize a deal between the SEC and Ripple to reduce a civil penalty and modify an injunction, despite both sides reaching an agreement.

Judge Analisa Torres of the U.S. District Court in Manhattan said the joint motion to finalize a settlement was denied “without prejudice,” meaning it can be resubmitted.

Earlier this month, the SEC and Ripple reached an agreement in principle to settle the SEC’s lawsuit, which began in December 2020. The agency had sued Ripple in 2020, claiming that its sale of XRP to institutional investors constituted an unregistered offering of a security.

As part of the pending settlement, the SEC agreed to drop its claims against two executives, Brad Garlinghouse and Chris Brzezinski, and to reduce the civil penalty against Ripple to $50 million from $125 million. The parties also requested that the judge vacate an injunction that barred Ripple from selling XRP to institutional investors.

However, Judge Torres said the request to modify the final judgment should be made separately, in a new motion. She added that the parties didn’t follow the correct legal process for making such an application.

After the ruling, Ripple’s Chief Legal Officer Stuart Alderoty took to X, formerly Twitter, to clarify the situation.

"Nothing in today's order changes (implied) overturning of SEC case,no new claims,no new issues. Same case,same outcome:major win for Ripple & crypto industry.Same process matters to Judge,who is focused on proper procedure.We&SEC will engage to quickly resolve this," he said.

The judge’s ruling comes as the SEC is facing increasing scrutiny over its actions in the crypto sector. Earlier this year, a federal judge ruled that the SEC failed to adequately explain why it had not approved any applications for Bitcoin ETFs despite approving applications for ETFs that track other asset classes.

The SEC has also been sued by several crypto firms, who claim that the agency’s actions are causing harm to the industry. In one case, a federal appeals court ruled that the SEC may have violated administrative law in levying a $600,000 penalty against an investment adviser.

As the SEC continues to pursue its enforcement agenda in the crypto sphere, it remains to be seen how these cases will ultimately unfold and what impact they will have on the broader cryptocurrency market.