Reuters reported that U.S. District Judge Analisa Torres of the Southern District of New York officially rejected the settlement agreement between the U.S. Securities and Exchange Commission (SEC) and cryptocurrency company Ripple Labs on Thursday, causing the XRP and SEC lawsuit to once again reach a deadlock.
According to the previous agreement, the SEC and Ripple had reached a consensus that Ripple would pay a $50 million fine to settle the civil lawsuit, which was far lower than the $125 million court ruling in 2023, a case that was considered the most representative enforcement action by the SEC in the cryptocurrency regulatory field.
However, Judge Torres refused to approve the settlement, believing that the agreement did not meet the requirements of judicial procedure and public interest. She pointed out that if the court had previously ruled that one party violated federal securities laws and needed to issue a permanent injunction and civil penalties to prevent recurrence, neither party could withdraw these penalties without the court's permission.
Torres wrote in her ruling: The parties have not proven that this case has special circumstances that override "public interest" and "judicial administrative procedures," thus constituting a legitimate reason for lifting the injunction and reducing penalties.
Ripple's Chief Legal Officer Stuart Alderoty subsequently stated on the social platform X that the company has not yet decided on its next legal action. The SEC has not immediately commented on the ruling.
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ToggleXRP Lawsuit Background and Core Disputes
The Ripple case originated in December 2020 when the SEC accused Ripple of illegally selling unregistered securities worth $1.3 billion. In July 2023, Judge Torres ruled that XRP sales on public exchanges were not securities, but the sale of approximately $728 million of XRP to institutional investors was illegal.
Ripple filed an appeal, and in May this year, with a shift towards more lenient regulatory policies after Trump's second term, Ripple and the SEC reached an agreement hoping to end the lawsuit by reducing fines and lifting the permanent injunction. This rejection means Ripple still faces further legal challenges.
Undaunted by the Lawsuit, Ripple Actively Moves Towards IPO and Stablecoin Layout
Despite the prolonged litigation, Ripple continues to develop its technology and products. To briefly review Ripple's history, the XRP Ledger (XRPL) developed by the company is one of the early blockchain development applications. In 2004, engineer Ryan Fugger developed RipplePay, the prototype for current XRP applications. In 2012, Jed McCaleb and Chris Larsen officially established Ripple Labs.
XRP is the native token of XRPL, designed as a bridge asset for cross-border payments. Under the RippleNet system, financial institutions can use tools including xCurrent (real-time settlement system), xVia (API solution), and xRapid (providing instant liquidity services). xRapid particularly requires XRP to facilitate fund conversion, increasing its application potential.
Ripple launched the RLUSD stablecoin based on XRPL and Ethereum in late 2024, with a current market cap of about $441 million.
Cryptocurrency advocate John Deaton once said that if Ripple could settle the lawsuit and go public (IPO), its valuation could exceed $100 billion, giving it a chance to compete with industry leaders like Circle and Tether.
After Trump's second term, the SEC has clearly slowed down its enforcement actions against crypto businesses, including terminating civil lawsuits against Binance, Coinbase, and Kraken. Federal Reserve Chairman Powell also acknowledged the pressure of debanking on crypto companies, stating that the industry is moving towards mainstream adoption.
Meanwhile, stablecoins are playing an important role in U.S. financial policy. Treasury Secretary Scott Bessent emphasized at the 2025 White House Crypto Summit that the U.S. will use stablecoins to consolidate the global dominance of the U.S. dollar.
Whether Ripple can successfully transform into a listed company still depends on how well it resolves current legal disputes (and handles the judge). Judge Torres has suddenly become the successor to Gary Gensler, becoming a new antagonist for Ripple. Now it remains to be seen whether Ripple can once again turn the tide and successfully bring the lawsuit to a close.
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