XRP dips as U.S. court rejects Ripple-SEC settlement bid over procedural misstep

Ripple’s attempt to finalize a settlement with the U.S. Securities and Exchange Commission has been halted after a federal judge dismissed their joint request as procedurally flawed. 

The decision, issued by Judge Analisa Torres of the U.S. District Court for the Southern District of New York on May 15, was first shared by attorney James Filan on X, who also posted the accompanying court documents. Filan noted that Judge Torres had “denied the parties’ motion for an indicative ruling.” 

The motion was deemed “procedurally improper” because it wasn’t filed under Rule 60, which requires proof of exceptional circumstances when modifying a final ruling.

The rejected motion, filed on May 8, sought to dissolve an injunction and reduce a $125 million civil penalty to $50 million. Both parties had agreed to the deal as part of a broader effort to settle the case during ongoing appeals. However, the judge’s ruling effectively blocks that plan unless the motion is refiled correctly.

Ripple’s chief legal officer, Stuart Alderoty, addressed the crypto community shortly after, clarifying that the court’s denial does not affect the company’s prior legal victories, including the 2023 ruling that XRP (XRP) is not a security in programmatic sales.

“This is about procedural concerns with the dismissal of Ripple’s cross-appeal,” he wrote on X, emphasizing that Ripple and the SEC agree on resolving the case.

Commenting on the setback, attorney Fred Rispoli added that both sides now have to “do it the hard, messy way” by formally requesting relief under the appropriate legal rule.

The SEC sued Ripple in 2020 for allegedly selling XRP as an unregistered security, sparking the start of a protracted legal battle. The SEC won a partial decision in 2023 that ruled that institutional sales qualified as securities. However, it was decided that retail sales did not violate security laws.

The delay has shaken market sentiment. XRP fell about 7% over the last day, while CoinGlass data indicates a 9.4% drop in open interest to $4.93 billion. As traders responded to the court’s ruling and the uncertainty it created, long positions worth over $21 million were liquidated. Traders are keeping a close eye on XRP’s next move as it retests support at $2.36.