Torres Rejects Joint Motion by Ripple and SEC

U.S. District Judge Analisa Torres has rejected Ripple and the SEC’s petition to modify key parts of an earlier ruling. The court decision issued on May 15 marks a setback for both parties, who had previously reached an agreement to settle the case under new terms.

The Case and the Original Request

Ripple and the SEC filed a motion in early May proposing two major changes: lifting the permanent ban on institutional XRP sales and reducing the fine imposed on Ripple from $125 million to $50 million. This agreement followed a political shift within the SEC after Gary Gensler stepped down. The new leadership adopted a less confrontational stance toward the crypto industry and aimed to resolve high-profile enforcement actions.

Torres’s Rationale: Procedural Defects

Despite both parties’ support, Judge Torres denied the motion, citing significant procedural errors. She believed the petition was filed under an incorrect rule. While the motion was presented as a settlement approval, it did not meet the strict legal criteria required to overturn a final judgment. Specifically, they did not invoke Rule 60 of the Federal Rules of Civil Procedure, which governs such motions.

Torres emphasized that courts only grant such relief in extraordinary circumstances—a threshold she believed was not met. She also clarified that she would deny the motion even if her jurisdiction were restored, as the case is currently pending on appeal.

Outlook and Reaction

The judge’s decision represents an unexpected turn. Ripple Chief Legal Officer Stuart Alderoty and other legal experts analyzed the implications of Torres’s ruling. Both parties now need to explore alternative legal avenues to resolve the case. This episode highlights the complexity of settlement negotiations in federal courts, even when all involved—plaintiffs, defendants, and regulators—seek an amicable resolution.