Ripple’s seemingly tidy settlement with the US Securities and Exchange Commission in the XRP lawsuit has hit a procedural wall. During a late-night X livestream on 15 May, attorney John E. Deaton dissected Judge Analisa Torres’s order refusing to “rubber-stamp” a joint motion that would have lifted the injunction on Ripple’s institutional XRP sales and cut the civil penalty to $50 million. Deaton characterised the order, which he read aloud at length, as a “curveball” that leaves both parties facing what the judge called a “heavy burden” before any relief will be granted.
XRP Lawsuit Faces Further Delay
According to Deaton, the parties had asked Judge Torres for an indicative ruling that would let the US Court of Appeals for the Second Circuit remand the case for settlement. Ripple had agreed to drop its own cross-appeal if the court would dissolve the permanent injunction that currently bars the company from further institutional-level XRP sales and reduce the civil penalty from roughly $150 million to $50 million. The SEC, for its part, had already abandoned its challenge to Torres’s holding that secondary-market XRP trading does not constitute a securities offering.
Judge Torres declined. Reading from the order, Deaton quoted the court’s central criticism: “By styling their motion as one for settlement approval, the parties fail to address the heavy burden they must overcome to vacate the injunction and substantially reduce the civil penalty.” The judge, he said, noted that relief of that kind is available only under Federal Rule of Civil Procedure 60, which demands “exceptional circumstances”—and she added pointedly that “the parties have made no effort to satisfy that burden” because “their request does not even mention the rule.”
Deaton told viewers he had expected a straightforward sign-off—“I thought the judge would rubber-stamp it”—and suggested that Torres’s refusal reflects frustration after five years of sprawling litigation. “Do you know how much time, energy and resources that this judge put into this case?” he asked. Estimating combined legal costs by Ripple and the SEC at around a quarter-billion dollars, he added: “Now the SEC comes around and says, ‘Just kidding.’ The judge is saying, ‘Not so fast.’”
In Deaton’s analysis, the order does not undo Ripple’s prior victories, including Torres’s July 2023 summary-judgment finding that programmatic sales and secondary trading of XRP are not investment-contract securities. It does, however, mean that the permanent injunction against direct institutional sales—and the original, larger monetary penalty—remain in place unless the parties return with a properly framed Rule 60 motion that satisfies the public-interest test.
“The judge is saying to the SEC and Ripple, ‘I’m not rubber-stamping anything. You need to put together an argument that convinces me that it is in the public’s best interest,’” Deaton said, stressing that such a showing must persuade Torres that removing the injunction will not harm investors or the market.
He predicted that the SEC will “have to fall on its sword” in any renewed submission, perhaps acknowledging that Congress is weighing bespoke digital-asset legislation and that most major crypto assets now trade more like commodities than securities: “They’ve got to cite that digital assets are akin to commodities and there is no victim here.”
Throughout the stream Deaton underscored that the development is procedural rather than substantive, yet still significant. “Ultimately this is just going to be another speed bump along the way, but it is a curveball,” he said, warning that the detour could postpone final resolution by “several more months.”
For now, the August 2024 judgment stands exactly as entered: Ripple remains enjoined from unregistered institutional sales of XRP and owes a civil penalty calculated on that basis; the SEC’s claims regarding secondary-market trading are dismissed; and the appeals in the Second Circuit will proceed unless the parties craft a fresh motion convincing Judge Torres that extraordinary circumstances warrant a different outcome.
Deaton summed up the road ahead with wary optimism: “I think, ultimately, this settlement will get done—but the XRP lawsuit is not over yet.”
At press time, XRP traded at $2.42.
Featured image from X, chart from TradingView.com
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