SEC-Ripple settlement stalled, judge declares it “procedurally improper”

A U.S. federal judge has derailed the much-awaited SEC-Ripple settlement, rejecting the proposed $50 million deal over procedural errors in a Thursday ruling that prolongs the high-stakes legal battle. U.S. District Judge Analisa Torres found both parties filed their motion improperly, dealing a temporary blow to efforts to resolve the SEC’s claim that Ripple illegally sold $1.3 billion in XRP.

Legal experts quickly noted the SEC-Ripple settlement isn’t dead – just delayed.

“They’ll refile correctly within weeks,” said former SEC enforcement chief Lisa Bragança.

The decision sent XRP sliding 1.6% to $2.42, though it remains up 366% year-over-year.

The ruling presents another hurdle in the four-year legal battle that began when the SEC accused Ripple of raising $1.3 billion through unregistered XRP sales.

Why the judge called the filing “procedurally improper”

Judge Torres’s 3-page order criticized the SEC and Ripple for bypassing Rule 60 of civil procedure, which governs modifications to final judgments. The proposed SEC-Ripple settlement would have reduced Ripple’s penalty from $125millionto$50 million and dissolved an injunction against the company.

“The parties have made no effort to satisfy [Rule 60’s] burden here; their request does not even mention the Rule,” Torres wrote.

Legal analyst Jake Chervinsky noted on X (formerly Twitter):

“This is a speed bump, not a roadblock. The SEC-Ripple settlement terms aren’t dead—they just need to file correctly.”

Market reaction and ripple’s next steps

XRP dipped 1.6% to $2.42 following the news but remains up 366% year-over-year, reflecting optimism that the SEC-Ripple settlement will eventually proceed. Ripple’s Chief Legal Officer, Stuart Alderoty, reassured stakeholders:

“Nothing in today’s order changes Ripple’s wins. We and the SEC agree on resolving this and will revisit with the Court.”

Sources close to the negotiations told Decrypt that both parties are preparing a revised filing addressing the judge’s concerns. The SEC-Ripple settlement could still face delays, however, as the Second Circuit must first rule on suspending pending appeals.

Broader implications for crypto regulation

Legal experts see this as part of a larger trend: “The SEC is moving from regulation by litigation to negotiated resolutions,” noted Georgetown Law’s Linda Jeng. This shift could accelerate congressional efforts to pass comprehensive crypto legislation, with House Republicans already advancing market structure bills.

The implications extend beyond Ripple. A successful settlement would establish a blueprint for resolving similar cases, potentially clearing regulatory fog for exchanges and token issuers. Conversely, prolonged delays could chill institutional investment just as crypto markets show signs of maturation.

Since taking office, the SEC has dropped lawsuits against Coinbase and Kraken—a stark contrast to the aggressive stance of former Chair Gary Gensler.

“The SEC-Ripple settlement signals the agency’s pivot toward compromise,” said Columbia Law professor Sarah Netburn. “But procedural missteps like this show even ‘friendly’ resolutions face scrutiny.”

What’s next for XRP holders?

While the SEC-Ripple settlement limbo continues, XRP’s price resilience suggests investor confidence. “The market’s betting this is a temporary delay,” said Bloomberg Intelligence analyst James Seyffart. Key dates to watch:

• June 2025: Deadline for Second Circuit appeal suspension ruling

• Q3 2025: Expected refiling of SEC-Ripple settlement terms

With the SEC under new leadership and the industry hungry for clarity, this delay forces a critical question: Will regulators pivot toward pragmatic compromise, or will legal technicalities keep crypto cases in limbo?

As Ripple and the SEC regroup, the outcome could set a precedent for how aggressively, or reasonably, future crypto cases are resolved. For now, the market’s muted reaction suggests investors still believe in an eventual deal. But if negotiations stall, the crypto industry may face renewed uncertainty just as it seeks stability.

Judge Torres’s ruling serves as a reminder that even agreed-upon deals must clear procedural hurdles—a lesson likely to resonate in future crypto enforcement cases.