In a post on X, defense attorney James Filan revealed that Judge Torres denied Ripple and the SEC's request for a declaratory judgment. The court determined that the request was 'procedurally improper,' noting that the request to relieve the cryptocurrency company of part of its obligation to cease the illegal sale of securities and pay the full civil penalty amounts to a request to vacate significant parts of the final judgment.
Judge Torres stated that the parties must file such a request in accordance with the Federal Rules of Civil Procedure, which govern motions for relief from a final judgment. The court further noted that, by presenting their motion as a request for approval of a settlement, Ripple and the SEC did not address the heavy burden they must overcome to vacate the injunction and substantially reduce the civil penalty.
The SEC of the U.S. presented its settlement agreement with Ripple before the court last week. As part of the agreement in the XRP lawsuit, the Commission requested the court to vacate the injunction against Ripple and reduce the monetary judgment from $125 million to $50 million.
However, as Judge Torres noted in her ruling on the motion, relief from the judgment under the Federal Rules of Civil Procedure is granted 'only upon a showing of exceptional circumstances.' She added that neither party has made any effort to satisfy the burden of proof, as their request does not even mention the rule.
It is worth mentioning that legal expert Bill Morgan warned that Judge Torres' decision on the request was still up in the air. He stated that the judge must consider that the agreement is in the public interest.
Legal expert Fred Rispoli explained that Ripple and the SEC will refile the motion according to the correct regulations. However, commenting on the wording of the court's decision, he noted that both parties must kneel and seek relief while aiming to finally resolve the XRP lawsuit.
MetaLawMan, another legal expert, had previously warned that it is by no means certain that a federal judge would agree to vacate a previous judgment as part of a settlement. He commented that this was quite common several years ago but that judges have now begun to show reluctance to do so.
In essence, granting the injunction by Judge Torres will not be straightforward, even if Ripple and the SEC refile their motion according to the proper procedure. She already mentioned that the district court must determine whether the proposed consent decree is fair and reasonable, with the additional requirement that the public interest is not harmed if the consent decree includes an injunction.
Ripple's Chief Legal Officer, Stuart Alderoty, also commented on Judge Torres' denial of the motion. In a post on X, he stated that nothing in the order alters his firm's victories, including the decision that XRP is not a security.
She added that the order pertains to procedural issues and that both parties fully agree to resolve the case and will jointly address the matter in court again. The price of XRP is currently trading around $2.40, down more than 4% in the last 24 hours.
