A U.S. federal judge has rejected a joint request by the Securities and Exchange Commission (SEC) and Ripple Labs to reduce a $125 million civil penalty and vacate a prior ruling that $XRP sales to institutional investors constituted securities transactions.
In a Thursday filing, Judge Analisa Torres of the U.S. District Court for the Southern District of New York declined to issue an indicative ruling that would have allowed the changes amid an ongoing appeals process. She said the prior decision remained consistent with federal securities laws and warned against bypassing the formal appellate process.
“None of this has changed — and the parties hardly pretend that it has,” Torres wrote. “They now claim that it is in the public interest to cut the civil penalty by sixty percent… The Court disagrees.”
The ruling upholds the court’s earlier finding that Ripple had violated Section 5 of the Securities Act in its primary XRP sales, ordering an injunction and monetary penalty. While the SEC had agreed to accept a reduced $50 million penalty as part of the case’s resolution, the judge emphasized that any modification must come through the appropriate legal channels.
The SEC and Ripple had jointly petitioned the court to release the $125 million held in escrow, with $75 million slated to be returned to Ripple if the reduced penalty had been approved.
The case has been closely watched by the crypto industry, seen as a bellwether for how U.S. regulators classify digital assets. Despite the ruling, both parties have agreed to end the litigation, and Ripple CEO Brad Garlinghouse previously declared the SEC’s dropped appeal as a “resounding victory.”
The SEC initially sued Ripple in December 2020. Judge Torres' refusal to modify the ruling underscores the judiciary's cautious stance in reassessing penalties outside the formal appeals process.
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