On May 8, the U.S. Securities and Exchange Commission (SEC) and Ripple submitted a joint request to a New York court, seeking to end an injunction placed on Ripple in August 2024 and to release $75 million out of $125 million in civil penalties, currently held in escrow, back to Ripple. This request follows a prolonged legal dispute over whether Ripple’s XRP token sales to institutional investors violated securities laws.

The settlement proposal includes the dissolution of a previous court order and a partial refund of penalties. In an official statement, the SEC explained the joint motion with Ripple, marking a significant development in the case that began in 2020.

SEC Commissioner Caroline Crenshaw publicly criticized the settlement in a separate statement on May 8. Crenshaw said, “This settlement, alongside the programmatic disassembly of the SEC’s crypto enforcement program, does a tremendous disservice to the investing public and undermines the court’s role in interpreting our securities laws.” She added that the agency’s recent actions, including dismissals of other crypto-related enforcement cases, “erode the credibility of our lawyers in court who are being asked to take legal positions today contrary to the ones taken just months ago.”

Crenshaw also warned that if Judge Analisa Torres approves the agreement, it would eliminate protections previously established for investors. She described the situation as creating a “regulatory vacuum” until further crypto regulations are developed, arguing, “The settlement is not in the best interests of the investors and markets that our agency is tasked with serving and protecting. It creates more questions than answers.”

After the 2023 court decision, Ripple had been ordered to pay $125 million in penalties, following a ruling that determined its XRP token fell under securities regulations when sold to institutional buyers. According to former federal prosecutor James Filan, the settlement is not yet finalized. Judge Torres must first signal agreement with the proposed settlement. If she does, both parties will seek a limited remand from the Second Circuit Court of Appeals, which could clear the way for the formal resolution of the case. As Filan explained on X, the legal process will conclude only after the injunction is dissolved, penalties are disbursed, and both sides request their appeals be dismissed.

The SEC originally filed its lawsuit against Ripple Labs in December 2020, alleging that the company violated registration requirements when selling its token to U.S. investors.

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