In a significant development for the cryptocurrency industry, the XRP lawsuit between Ripple and the SEC has encountered an unexpected procedural hurdle. Judge Analisa Torres has declined to approve the proposed settlement agreement, citing insufficient justification for modifying the existing injunction and penalty structure.
Key Developments in the XRP Settlement Rejection
During a detailed livestream analysis on May 15, prominent crypto attorney John E. Deaton revealed that Judge Torres has refused to “rubber-stamp” the joint motion that would have:
- Lifted the injunction on Ripple’s institutional XRP sales
- Reduced the civil penalty from $150 million to $50 million
- Resolved outstanding appeals in the Second Circuit
This development follows Ripple’s earlier legal victories, which remain intact despite this setback. The judge’s decision centers on procedural requirements rather than the substantive merits of the case.
Understanding the Legal Requirements
According to Judge Torres, the parties failed to address the “heavy burden” required under Federal Rule of Civil Procedure 60 to:
- Vacate the existing injunction
- Substantially reduce the civil penalty
- Demonstrate exceptional circumstances warranting relief
Market Impact and Price Analysis
The news comes as XRP tests critical support levels around $2.35. Despite the legal uncertainty, the token has maintained relative stability, trading at $2.42 at press time.
FAQ: Key Questions About the XRP Settlement Rejection
Q: Does this invalidate Ripple’s previous court victories?
A: No, the July 2023 ruling that programmatic sales and secondary trading of XRP are not securities remains intact.
Q: How long might the settlement delay last?
A: According to Deaton, the procedural requirements could extend the timeline by several months.
Q: What must the parties do next?
A: They need to file a properly framed Rule 60 motion that demonstrates exceptional circumstances and public interest benefits.
Looking Ahead: Next Steps in the XRP Lawsuit
For the settlement to proceed, both parties must:
- Address the Rule 60 requirements explicitly
- Demonstrate exceptional circumstances
- Prove the public interest benefits of the proposed changes
- Show that removing the injunction won’t harm investors
The SEC may need to acknowledge evolving crypto regulatory frameworks and the commodity-like nature of digital assets to satisfy these requirements.