The legal dispute between Ripple Labs and the US Securities and Exchange Commission (SEC) seems to have no end. This time, however, the request not to proceed with the lawsuit comes from the two contenders themselves.
The reason for the postponement is related to the desire to resolve the dispute in the district court or in the first instance court.
The agreement is there, but the court's approval is needed
According to a document filed yesterday, Ripple and the SEC signed an agreement on May 8. The terms include a $50 million fine against Ripple, a significant reduction from the original $125 million, and the return of the remaining $75 million.
At the moment, however, the agreement is blocked: its validity depends on the court's willingness to modify the previous verdict. A first attempt was rejected on May 15, due to the lack of "exceptional circumstances" required by law.
The ruling that Ripple and the SEC want to change dates back to July 2023, when Judge Annalisa Torres ruled that sales of XRP through exchanges (secondary market) did not violate securities laws, while those aimed at institutional investors (primary market, through ICOs) were to be considered as sales of unregistered securities (essentially shares, and therefore under the jurisdiction of the SEC), sentencing Ripple to pay 125 million dollars.
Now, after reaching an agreement also thanks to the more permissive policies of the SEC, the parties have asked the court to intervene on that sentence, reducing the penalty from 125 to 50 million, revoking the injunction and authorizing the return of the excess 75 million. For this to happen, however, the judge must recognize the existence of the famous "exceptional circumstances" that, so far, have not been accepted.
What would these exceptional circumstances be?
In U.S. law, when a case is on appeal, the lower court can only intervene if there are “exceptional circumstances.”
This is not a generic formula: a solid reason is needed to revise a ruling that has already been issued. In the Ripple vs SEC case, the signing of an agreement between the parties is certainly a first element: it shows that neither party has an interest in continuing the dispute.
But that's not all. The court may also consider relevant the fact that the agreement does not harm the public interest and allows to close a dispute that has already consumed legal resources and energy for several years.
In some cases, the presence of new elements or concrete changes that make the original ruling obsolete is also considered “exceptional.”
But it’s not a necessary act: the judge has already rejected a first motion, and now Ripple and the SEC are trying again.
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