$75 million settlement raises questions over Ripple case outcome

The US Securities and Exchange Commission (SEC) and Ripple (CRYPTO:XRP) have filed a joint settlement letter requesting the dissolution of the August 2024 injunction against Ripple.

The settlement proposes returning $75 million of the $125 million civil penalties held in escrow to Ripple, according to a May 8 SEC statement.

SEC Commissioner Caroline Crenshaw criticised the settlement, warning it could weaken the SEC’s ability to regulate crypto firms and undermine court rulings.

“This settlement, alongside the programmatic disassembly of the SEC’s crypto enforcement program, does a tremendous disservice to the investing public and undermines the court’s role in interpreting our securities laws,” Crenshaw said.

She added that the settlement “joins a line of dismissals that collectively erode the credibility of our lawyers in court who are being asked to take legal positions today contrary to the ones taken just months ago.”

The SEC’s enforcement approach toward crypto has softened since former Chair Gary Gensler’s tenure, with more cases being dismissed under the current administration.

Crenshaw also cautioned that if Judge Torres approves the settlement, it could erase “the investor protections we already won” and create a “regulatory vacuum” until new crypto regulations are established.

The original case stems from a December 2020 SEC lawsuit accusing Ripple Labs of selling its XRP token as an unregistered security.

In August 2024, Judge Torres ordered Ripple to pay $125 million in penalties after ruling XRP sales to institutional investors violated securities laws.

Legal analyst James Filan noted that the settlement is not final until Judge Torres issues an indicative ruling and the Second Circuit Court of Appeals grants a limited remand.

“After the injunction is dissolved and the funds distributed, the SEC and Ripple will ask the Court of Appeals to dismiss the SEC’s appeal and Ripple’s cross-appeal. Then it will be over,” Filan explained.

At the time of reporting, the XRP (XRP) price was $2.31.