SEC Offers $50 Million Settlement in Ripple Case Amid Broader Crypto Regulatory Shift

In a notable development in the ongoing legal battle between the Securities and Exchange Commission and Ripple Labs, the SEC has proposed a $50 million settlement to resolve its long-standing lawsuit against the cryptocurrency firm. This move marks a continued softening in the agency’s approach toward the cryptocurrency industry and follows similar settlements with major crypto platforms like Coinbase and Gemini.

Announced on Thursday, the proposed settlement would see Ripple Labs pay $50 million from a $125 million escrow fund that had been earmarked as part of the original August 2024 court judgment. The remaining $75 million would be returned to Ripple. The offer, however, still requires the approval of U.S. District Court Judge Analisa Torres, who originally presided over the case and issued the ruling that is now being reconsidered. While the legal foundation underpinning her decision remains intact, the regulatory landscape has shifted significantly since that judgment was rendered.

The SEC’s recent pivot on crypto enforcement is largely attributed to changes under new SEC Chair Paul Atkins. In coordination with the Department of Justice and other regulatory agencies, Atkins has signaled a comprehensive overhaul of how digital assets are governed. The federal government’s broader policy change has coincided with President Donald Trump’s public embrace of cryptocurrencies. Since taking office in January, Trump has declared his intention to establish the U.S. as a “bitcoin superpower” and the “crypto capital of the planet,” while also marketing and selling his own line of branded crypto coins—a move that has drawn scrutiny over potential self-dealing and conflicts of interest.

In addition to monetary terms, the Ripple settlement would lift a key restriction imposed by the court. The original ruling included an injunction that barred Ripple from selling its XRP token until the case concluded. Both Ripple and the SEC had appealed the decision to the U.S. Court of Appeals for the Second Circuit, but if the proposed agreement is accepted, those appeals would be dropped.

Ripple Labs is already claiming the proposed settlement as a decisive win. “This is it – the moment we’ve been waiting for,” wrote Ripple CEO Bradley Garlinghouse in a post on X. “The SEC will drop its appeal – a resounding victory for Ripple, for crypto, every way you look at it.”

Yet not everyone at the SEC is celebrating. Democratic Commissioner Caroline Crenshaw issued a pointed dissent, criticizing the deal as one that could effectively nullify the court’s original injunction. “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,” Crenshaw stated. She warned that Ripple would be able to resume selling XRP “without consequence,” given the agency’s apparent reluctance to enforce existing securities laws under its new leadership.

The legal saga began in 2020 when the SEC filed suit against Ripple Labs and its co-founders, Bradley Garlinghouse and Christian Larsen. The agency accused the company of illegally selling $1.3 billion worth of XRP tokens from 2012 to 2020 without registering them as securities. In a partial win for Ripple, Judge Torres ruled in July 2023 that approximately half of those sales did not violate securities laws. However, she allowed the SEC to continue pursuing charges related to $728 million in XRP sales that she found potentially in breach of the law.

Now, with the SEC signaling a changed perspective on the regulatory status of cryptocurrencies, it remains to be seen how Judge Torres will respond to the agency’s proposal. Unlike the earlier settlements involving Coinbase and Gemini, the Ripple case carries significant legal weight and complexity. As such, approval of the settlement is far from guaranteed. The coming weeks may determine whether the Ripple case will become the definitive pivot point in the evolution of U.S. crypto regulation.

By fLEXI tEAM