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A federal judge rejected the SEC and Ripple Labs’ joint request for an indicative ruling. The settlement would have lifted a standing court injunction against future securities violations and drastically reduced Ripple’s $125 million civil penalty.

The court found the parties’ joint motion procedurally incorrect.  US District Judge Analisa Torres dismissed it on May 15.

The motion asked the court to lower the civil penalty from $125 million to $50 million and to lift a previous permanent injunction against Ripple.

The original penalty was imposed after the court determined that Ripple had violated the Securities Act by offering and selling unregistered securities to institutional investors. This action was perceived as part of an ongoing effort to settle their years-long legal battle over alleged securities law violations.

Judge Torres declared that the request was not properly filed. It was a request for relief from the court’s August 2024 final judgment, even though it was filed as a motion for settlement approval.

Rule 60 requires a much higher legal standard, more precisely, the demonstration of “exceptional circumstances” to support relief from a final judgment, and such a request must adhere to it.

Judge Torres noted that the parties did not refer to Rule 60 or its strict requirements.

Since the proposed settlement was denied, Ripple remains subject to the August 2024 ruling that determined its institutional XRP sales were unregistered securities offerings, fined the company $125 million, and prohibited any further violations regarding those sales.

“Nothing in today’s order changes Ripple’s wins,” Stuart Alderoty, chief legal officer at Ripple, stressed, even though the rejection maintains that penalty. “Procedural concerns with the dismissal of Ripple’s cross-appeal” were the main focus of the ruling, Alderoty added, noting that Ripple and the SEC are still working together to resolve the matter.

He mentioned they intend to return to the court to discuss the issue.