Judge once more rejects plea to reduce Ripple's SEC fine
In a significant development for the cryptocurrency industry, Ripple, a leading blockchain company, has reached a settlement with the Securities and Exchange Commission (SEC) regarding its digital asset, XRP. The long-running case, which began in December 2020, was officially closed in August 2025.
Stu Alderoty, Ripple's chief legal officer, confirmed that the court presented two options to Ripple. However, Judge Analisa Torres of the U.S. District Court for the Southern District of New York refused the request to change XRP's legal status as a security, citing the need for "exceptional circumstances" as stated in Rule 60.
Despite this, the settlement has brought about a new era of regulatory clarity for XRP. Judge Torres has officially recognised XRP as a non-security for retail investors, enabling clearer regulatory treatment and fostering institutional re-entry and ETF creation.
The settlement also reflects enforcement focused primarily on how XRP was sold, not its fundamental classification as a security across the board. Ripple agreed to pay a $125 million penalty tied to unregistered sales of XRP to institutional investors.
The court's distinction between primary market institutional sales (considered securities sales) and secondary market retail sales (not securities) remains an important regulatory precedent affecting XRP and potentially other digital assets.
The SEC granted Ripple a waiver from certain Regulation D disqualification provisions, which facilitates Ripple's ability to conduct institutional transactions without automatic restrictions stemming from past violations.
This settlement has sparked renewed institutional interest and trading volumes, with XRP prices rallying in response to the settled status and regulatory clarity. However, it's important to note that XRP remains subject to penalties and injunctions related to prior institutional sales missteps.
The SEC and Ripple have pending appeals before the 2nd Circuit regarding Torres' previous ruling. The SEC, under new management, asked Torres in May to dissolve her injunction so that $75 million of that penalty could be returned to Ripple. Ripple CEO Brad Garlinghouse has indicated that the company will drop its cross appeal, and the SEC is expected to drop their appeal.
The SEC's request for a reduction in the penalty for Ripple was based on a change in agency policy and the claim that a lighter touch toward Ripple would be consistent. The SEC also launched a crypto task force to help develop the regulatory framework for crypto assets.
The SEC sued Ripple in December 2020, alleging that their token, XRP, is a security. The SEC's ongoing efforts to clarify the regulatory landscape for cryptocurrencies are evident in their recent actions, including the dismissal of four crypto-related enforcement actions by joint stipulation.
Moving forward, Ripple plans to focus on building the "Internet of Value," with the settlement providing a significant step towards regulatory clarity for XRP and the broader cryptocurrency industry.
Investing in Ripple's XRP might be more appealing due to the regulatory clarity established by the settlement, where XRP is recognized as non-security for retail investors. This settlement also influences technology-oriented businesses, as the court distinction between primary market institutional sales (considered securities) and secondary market retail sales (not securities) could impact other digital assets in the future.
