Judge Analisa Torres Rejects Ripple-SEC Settlement – Formal Procedural Errors Lead to Failure

In early May, Ripple and the U.S. SEC agreed on a compromise to settle their longstanding legal dispute. However, this hope was quickly dashed: U.S. District Judge Analisa Torres rejected the joint motion from both parties, preventing the planned modification of the original ruling. With this decision on May 15, the status quo remains — a setback for both sides, which had already negotiated a settlement at the beginning of the month.

The Failed Compromise: Ripple’s Hope for Leniency Fails Due to Procedural Errors

The original motion filed on May 8 aimed for two key changes. First, it sought to lift the permanent injunction against Ripple, which prohibits the company from conducting future institutional sales of XRP. Second, Ripple and the SEC requested a reduction of the civil monetary penalty from $125 million to $50 million.

This agreement was the result of a political shift: after the resignation of former SEC Chair Gary Gensler, a new leadership took control of the agency and has since pursued a more conciliatory approach toward the crypto industry. The SEC signaled its willingness to settle several high-profile enforcement actions, including the Ripple case. However, Judge Torres thwarted these plans with her legally compliant decision.

Torres’ Rationale: Why the Formal Requirements Were Not Met

Judge Analisa Torres’ rejection was based on a procedural error: the two parties filed their motion under the wrong rule of the Federal Rules of Civil Procedure. They framed their request as a motion for approval of a settlement but failed to meet the strict legal criteria required to overturn final judgments.

According to Torres, Ripple and the SEC should have referenced Rule 60 of the Federal Rules of Civil Procedure — which explicitly governs motions to vacate final judgments. The permanent injunction and the monetary penalty are considered such final judgments. Torres clarified in her order that the court grants such relief only in rare and extraordinary cases — a threshold the parties did not meet.

Notably, Torres emphasized that even if her jurisdiction were restored (the case is currently on appeal), she would still deny the improperly filed motion.

Implications and Next Steps for Ripple

This decision by Judge Analisa Torres represents a significant setback — not only for Ripple, which hoped for relief from penalties, but also for the SEC under her new leadership, which aimed for a settlement. The rejection demonstrates that even mutual agreement between parties cannot bypass formal procedural requirements.

Ripple’s Chief Legal Officer Stuart Alderoty and other legal experts analyzed the decision and its implications. The next step for Ripple will likely be to refile the motion properly under Rule 60 — taking into account the stricter standards set by Torres. However, it remains uncertain whether the party can demonstrate that “rare and extraordinary” circumstances justify overturning the original judgment.