The judge rejected both parties' settlement proposal and upheld the original fine of $125 million.
Judge Analisa Torres of the United States District Court for the Southern District of New York officially rejected the joint motion of Ripple Labs and the U.S. Securities and Exchange Commission (SEC) on June 26, refusing to reduce Ripple's civil fine from $125 million to $50 million and also denying the withdrawal of the permanent injunction against the company.
In her ruling, Judge Torres stated that while the SEC has the right to change its position after the initiation of enforcement action, neither party has the authority to agree to no longer be bound by the court's final judgment. She emphasized that to modify the judgment, there must be proof of 'special circumstances that go beyond public interest or judicial management,' and both parties 'have far from met that requirement' in this regard.
This ruling was made after the SEC and Ripple submitted a motion for a declaratory judgment two weeks ago. Previously, Judge Torres had rejected both parties' first attempt in May due to procedural defects. Both parties had hoped that the court would express preliminary support for their negotiated solution, thereby ending the dispute without an appeal.
The SEC's dramatic shift in position is questioned, and the judge asked: Why withdraw the injunction requiring compliance?
Judge Torres specifically noted in her ruling the SEC's arguments in the early stages of the case, when the agency strongly asserted that the injunction and monetary penalties served the public interest. She questioned whether the SEC's new argument is reasonable, given the agency's previous strong allegations against Ripple.
'If the court should not be concerned about Ripple violating the law, then why do both parties want to eliminate the injunction telling Ripple to 'comply with the law'?' Judge Torres wrote in her ruling. She pointed out that when the court imposed the injunction, it was because it found that Ripple had a 'reasonable likelihood' of continuing to violate federal securities laws, 'this has not changed, and neither party claims that there has been a change.'
Corey Frayer, director of investor protection at the Consumer Federation, stated: 'Regardless of changes in leadership, the SEC avoids wavering in ongoing litigation to protect the agency's credibility.'
The outlook of the case is unclear, and the price of XRP has fallen by more than 3%.
This ruling continues to prohibit Ripple from selling $XRP to institutional investors while also retaining the original fine amount. Both parties had initially paused the appeal process, hoping for a favorable ruling, but with this motion rejected, the appeal process may be restarted.
The next critical date is August 15, when the SEC must submit a status report to the court. If a resolution cannot be reached, the case may return to the Second Circuit Court of Appeals, extending the legal process until the end of 2025 or longer, potentially even into 2026.
The market has already shown signs of concern, with $XRP dropping more than 3% following the news, trading at around $2.12. Ripple's Chief Legal Officer Stuart Alderoty responded on the X platform, saying: 'The ball is back in our court.' He stated that the company could choose to withdraw the appeal or proceed with it, but 'regardless, the legal status of $XRP as a non-security remains unchanged.'
Image source: X Ripple Chief Legal Officer Stuart Alderoty responded on the X platform, stating that the legal status of $XRP as a non-security remains unchanged.
It is worth noting that Judge Torres's fundamental ruling from July 2023 remains in effect, which determined that Ripple's programmatic sales of $XRP on exchanges do not constitute securities, but sales to institutional buyers do constitute securities, meaning the legal status of $XRP itself has not changed due to this ruling.
This content is generated by the crypto Agent summarizing various information and reviewed by (Crypto City). It is still in the training phase and may contain logical biases or information errors. The content is for reference only and should not be considered as investment advice.
The article 'Ripple SEC Lawsuit Update: Judge Upholds $125 Million Fine, XRP Falls 3%' was first published by 'Crypto City'.
