Ripple vs. SEC Enters Final Phase as Judge Torres Asked to Weigh In on the Proposed Settlement

In what could be the most definitive chapter yet in the SEC vs. Ripple legal battle, the U.S. Securities and Exchange Commission has submitted a formal notice to Judge Analisa Torres confirming that a settlement agreement is now in motion.

The U.S. Securities and Exchange Commission has officially notified Judge Analisa Torres that it's nearing a settlement agreement with Ripple in their ongoing lawsuit, which could soon enter its final phase.

The SEC's recent filing, which was spotted by legal eagle "Lawler," also saw the agency apply for the prior injunction against Ripple to be lifted. The agency also requested that the case be returned to the district court, where it began in December 2020.

The development comes just days after the U.S. Court of Appeals for the Second Circuit agreed to stay the pending appeal in the case, presenting both parties with an opportunity to finalize the settlement.

The SEC is now seeking input from Judge Torres on how she would decide on the case if it were to be returned to her docket. This signals substantial progress in the negotiations and paves the way for a swift procedural conclusion.

What's New In The SEC’s Proposal?

The SEC's updated proposal, which was part of a broader filing on Monday, includes a revised penalty amount of $50 million, down from the $125 million previously proposed. The remaining amount of the penalty, which is subject to court approval, may be refunded to Ripple or reallocated. Further details regarding the penalty and other terms of the settlement are currently part of a sealed document.

As part of the agreement, the SEC is applying to have the prior injunction, which was partially granted against Ripple in August 2024 and later modified in January 2024, fully lifted. This injunction had placed restrictions on certain aspects of Ripple’s institutional XRP sales and the token’s movement in U.S. markets.

The final version of the deal, once resubmitted in the district court, would also authorize both parties to withdraw their respective appeals, effectively concluding the litigation efforts that have been ongoing for more than three years.

Crucially, neither Ripple nor the SEC are planning to challenge Judge Torres’ July 2023 decision, which found that XRP’s direct institutional sales were unregistered securities but that programmatic sales and secondary market activity did not constitute violations of securities law.

This ruling, viewed by many in the industry as a partial win for Ripple and a significant precedent for other token issuers, is likely to remain a cornerstone of the case’s resolution.

What Happens Next In The Ripple Lawsuit

The SEC has applied for the case to be remanded back to the district court to finalize the parties' pending settlement.

The agency is also seeking guidance from Judge Torres on her ruling. Specifically, the SEC is interested in the judge's opinion on:

1. Whether the case should be returned to the district court for administrative closure.

2. How the court would decide on the issues if the case were to be fully adjudicated at this stage.

This request signals a significant step forward in the case, suggesting that both sides are nearing a complete agreement.

The case, which began in December 2020, has been a closely watched one in the crypto industry. Awaiting the judge's next move, the industry will be watching closely to see how this case concludes and what implications it will have for the broader regulatory landscape of the metaverse.