The US District Court for the Southern District of New York has thrown out a joint bid by Ripple Labs and the Securities and Exchange Commission (SEC) seeking to alter a previous judgment.
Among the other thorny issues is a significant reduction in Ripple’s civil penalty that the courts must consider. District Judge Analisa Torres issued the ruling, and this means that the existing injunction against Ripple and the original $125 million penalty remain in place for now.
Judge Torres noted a procedural misstep in the Ripple and SEC appeal
The request by the two parties is a culmination of a purported settlement agreement which was made earlier this month between Ripple and the SEC aimed at resolving their longstanding legal battle, which is currently under appeal in the Second Circuit.
According to the proposed terms of the agreement between the two, the parties asked the court for an indicative ruling that would dissolve an injunction barring Ripple’s unlawful offer and sale of securities. Additionally, the agreement also toyed with the idea of slashing the previously imposed penalty of $125 million to $50 million, representing a 60% reduction.
The legal battle started in 2020 when the SEC accused Ripple and its executives of carrying out an illegal offer and sale of securities. Reports indicate that in July 2023, Judge Torres discovered that Ripple had indeed carried out the offense; offered and sold unregistered securities, subsequently violating Section 5 of the Securities Act.
As a result, the court entered a final judgment in August last year, admonishing Ripple from such activities as well as ordering the payment of a substantial civil penalty. Ripple was asked to pay 111% of the penalty amount into an interest-bearing account pending appeals filed by both parties.
According to today’s order, Judge Torres indicated that while both SEC and Ripple framed their requests as a “settlement approval,” the substance of their motion was a request to leave huge portions of the final judgment. Judge Torres found this procedural approach “inapposite.”
In a post on the X platform, Ripple’s chief legal officer Stuart Alderoty emphasized that the ruling was not about the case’s outcome but about technical legal steps that are related to Ripple’s cross-appeal.
“Nothing in today’s order changes Ripple’s wins (i.e., XRP is not a security, etc),” wrote Alderoty.
“This is about procedural concerns with the dismissal of Ripple’s cross-appeal. Ripple and the SEC are fully in agreement to resolve this case and will revisit this issue with the Court, together.”
Alderoty.
Alderoty’s comments spell a mix of relief and hope about the case, that the ruling was merely based on procedural concerns and that the case could reach a conclusion soon.
The ruling attracted mixed reactions
In the ruling, Judge Torres also explained that the relief from a final judgment is governed by Federal Rule of Civil Procedure 60, and this requires a showing of “exceptional circumstances. The Order states that: “The parties have made no effort to satisfy that burden here; their request does not even mention the rule.”
Resultantly, Judge Torres settled that if the court had jurisdiction (which it currently does not, due to the ongoing appeal), the motion would be denied as “procedurally improper.” As such, the motion for an indicative ruling was rejected.
The ruling drew mixed reactions from enthusiasts following the case and updates on the X platform.
“The meaning here is that the parties didn’t request relief under the right rule of civil procedure. So they will refile it under the correct rule but, me reading between the lines, is that Ripple and the SEC need to get on all fours and beg for relief.”
Fred Rispoli.
Others expressed frustration at the procedural misstep, with one user identified as Crypto_Owl saying: “How did you guys screw this up?? You fight for 5 years and spend a few hundred million dollars and get denied due to improper procedure!!”
Following the ruling, the XRP price went down 4.68%.
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