In a critical move that may finally bring the nearly four-year Ripple-SEC legal standoff to an end, the U.S. Securities and Exchange Commission (SEC) has filed a motion requesting court approval for a settlement with Ripple Labs.
The agreement, revealed in a May 8 court filing, includes the withdrawal of both parties’ appeals to the Second Circuit and aims to resolve one of the most consequential cases in U.S. crypto history.
Ripple Clears Legal Hurdle: XRP Institutional Sales No Longer Under Threat
The proposed settlement offers Ripple both legal clarity and a partial financial reprieve. If approved by Judge Analisa Torres, Ripple will recover $75 million of the $125 million civil penalty previously held in escrow.
The remaining $50 million will go to the SEC as part of the revised penalty structure. Most importantly, Ripple would regain the ability to resume institutional XRP sales without facing fresh enforcement actions under current securities law.
The filing follows Torres’ landmark 2023 summary judgment, which created a legal distinction between programmatic XRP sales on public exchanges, ruled not to be securities, and institutional sales, which were deemed to fall within the SEC’s jurisdiction.
While neither Ripple nor the SEC will challenge this precedent, they now seek to formally bring the case to a close by asking the court to approve the deal and release escrowed funds.
Internal SEC Rift: Commissioner Crenshaw Sounds the Alarm
Not all voices within the SEC are unified in support. Commissioner Caroline A. Crenshaw issued a sharply worded remark, breaking ranks with Chair Paul Atkins and other commissioners. In a statement posted to the SEC website, Crenshaw labeled the settlement a “tremendous disservice to the investing public,” warning that it could set a dangerous precedent by softening the agency’s posture on crypto enforcement.
“There’s a risk this agreement will be interpreted as a green light for token issuers to sidestep registration,” Crenshaw wrote. “It undermines the credibility of our enforcement framework at a time when the industry most needs regulatory clarity and accountability.”
Her remarks add to growing speculation that the SEC may be shifting toward a less aggressive crypto policy, especially amid legal setbacks and shifting political winds.
Ripple Settlement Reflects Shifting Regulatory Terrain
Observers have noted that the timing of this agreement is no coincidence. With crypto regulation becoming a focal point in the upcoming U.S. election cycle, and with Republican leaders publicly endorsing pro-crypto frameworks, regulatory agencies like the SEC may be reevaluating their strategic posture.
Former SEC official John Reed Stark, now a vocal critic of the agency’s crypto policies, recently declared the SEC’s crypto enforcement division “effectively defanged.” His statement came just days before the Ripple settlement surfaced, fueling rumors of an internal policy pivot.
The Broader Impact: What This Means for the Industry
The SEC emphasized in its motion that the Ripple case has already served a broader purpose by establishing legal guidelines for token offerings and clarifying when and how digital assets fall under securities laws. For much of the industry, the key takeaway from this litigation is now set: how a token is sold matters more than what the token is.
If the court grants the motion, Ripple and the SEC will swiftly dismiss their appeals, closing the books on a landmark case that began in December 2020 and has since shaped countless legal arguments and market narratives.
What Comes Next?
- Judge Analisa Torres will review the motion and determine whether to authorize the settlement and release the funds
- If approved, both Ripple and the SEC will file to dismiss their appeals at the Second Circuit
- A final ruling could effectively rewrite the enforcement playbook for future SEC actions in the digital asset space
Final Word: End of an Era or Beginning of a New Battle?
While the legal fight may be ending, the ideological battle over how to regulate crypto in the U.S. is far from over. Commissioner Crenshaw’s dissent is likely to echo in upcoming Congressional hearings, policy papers, and perhaps even 2024 campaign platforms. Meanwhile, Ripple’s partial victory offers a blueprint for how crypto companies might navigate legal uncertainty through negotiation rather than litigation.
Ripple appears poised to reenter the institutional market with renewed clarity—and perhaps a stronger hand.
