Judge Rejects SEC and Ripple Request for Indicative Ruling on $50M Settlement

The U.S. District Court for the Southern District of New York has rejected a joint request from the Securities and Exchange Commission (SEC) and Ripple Labs for an indicative ruling tied to their ongoing legal battle. The decision marks a procedural setback for both parties, which had recently reached a tentative settlement in the high-profile case. Last week, the SEC and Ripple jointly submitted a request seeking a statement from the court on whether it would approve a deal to reduce Ripple’s financial penalties. Under the proposed agreement, the original $125 million penalty imposed in August 2024 would be reduced to $50 million. The parties also sought to lift a court-imposed injunction that restricts Ripple’s business activities. However, District Judge Analisa Torres dismissed the motion on procedural grounds. In a court order issued Thursday, she explained that the court lacks jurisdiction while the case remains under appeal at the U.S. Court of Appeals for the Second Circuit. What Is an Indicative Ruling? An indicative ruling is a mechanism under Rule 62.1 of the Federal Rules of Civil Procedure, allowing a district court to signal how it might rule on a motion if the case were remanded from appellate court. While the district court cannot act on the motion itself during an appeal, it may offer an opinion to help guide higher court deliberations. In this case, Judge Torres declined to issue such a signal, writing: “Accordingly, if jurisdiction were restored to this Court, the Court would deny the parties’ motion as procedurally improper.” Background Ripple and the SEC have been locked in a legal battle since 2020, when the agency sued the crypto company for allegedly offering XRP as an unregistered security. In August 2024, the court imposed penalties totaling $125 million and placed an injunction on Ripple’s institutional sales of XRP. Both Ripple and the SEC appealed aspects of the judgment. Their recent joint settlement proposal appeared aimed at ending the protracted litigation, but the appellate process now remains the primary legal pathway. What’s Next? With the request for an indicative ruling denied, the parties must wait for the Second Circuit to either resolve their cross-appeals or remand the case back to the district court. Until then, any revisions to the August 2024 judgment remain on hold.