On Thursday, Judge Analisa Torres of the U.S. District Court for the Southern District of New York issued an order denying a key motion filed by Ripple and the Securities and Exchange Commission (SEC) for an indicative ruling.
As reported by U.Today, the parties previously asked Judge Torres to dissolve a permanent injunction against Ripple and cut the monetary penalty imposed on the company from $125 million to $50 million.
Ripple and the SEC based their request on a settlement agreement and invoked Rule 60(b), which makes it possible for a court to relieve a party from a final judgment.
However, the court explicitly stated it is not persuaded by arguments in favor of modifying the final judgment.
Key reasons behind denial
In her ruling, Judge Torres emphasized that court rulings serve the public, not just the litigants. The law does not allow Ripple and the SEC to simply undo the court judgment. This would only be possible in exceptional circumstances.
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The judge pointed out that the SEC itself previously stressed the need for harsher penalties against Ripple due to its "reckless" and "egregious" violations that lasted for eight years. Earlier, the agency stated that Ripple would continue violating the law, and the judge has recalled that in her ruling.
"None of this has changed—and the parties hardly pretend that it has. Nevertheless, they now claim that it is in the public interest to cut the Civil Penalty by sixty percent and vacate the permanent injunction entered less than a year ago," Judge Torres said.
As reported by U.Today, Ripple cited the SEC's pro-crypto U-turn to convince the judge to amend the final judgment. The company argued that this would level the playing field given that the agency has dropped a lot of other crypto cases against such prominent companies as Coinbase and Kraken following the departure of former SEC head Gary Gensler. However, the judge noted that none of the cases actually involved injunctions or penalties.
The ruling said, "The Court is not persuaded. For starters, none of the enforcement actions cited by the parties involved an injunction or a civil penalty. In each of those cases, the SEC dismissed its case before a court found a violation of federal securities laws. Moreover, dissolution of the injunction as a precondition to the termination of the parties' appeals is only necessary because the parties, in their Agreement, made it so."
Judge Torres has expressed concerns about the integrity of final judgments to justify the ruling.
In 2023, the court determined that the San Francisco-based company violated securities laws by selling XRP to institutional investors without proper registration.
In August 2024, the court issued its final judgement, imposing the $125 million penalty and the injunction that prevents Ripple from selling XRP to institutional clients in the U.S.
The SEC and Ripple then filed their appeal and cross-appeal, respectively, in October before reaching a settlement agreement earlier this year following Gensler's exit.
What happens next?
As reported by U.Today, lawyer Bill Morgan stated that the now-denied motion was crucially important. The denial could mean that the appeals process will continue, thus prolonging the case.
Earlier this week, however, Morgan opined that it would make more sense for Ripple to accept the penalty and the permanent injunction.
XRP is down 1.6% over the past 24 hours.
