SEC Backs Down: Ripple Settles XRP Case for Fraction of Original Demand, XRP Price Jumps 8%

TLDR

SEC and Ripple have agreed to a $50 million settlement in the long-running XRP lawsuit The settlement requires court approval from Judge Analisa Torres The agreement returns $75 million of the original $125 million penalty to Ripple XRP price rose 8% following the news to $2.30 SEC Commissioner Caroline Crenshaw criticized the settlement, claiming it creates a “regulatory vacuum”

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The Securities and Exchange Commission (SEC) has filed for a settlement with Ripple Labs to resolve their four-year legal battle over XRP token sales.

The proposed agreement would require Ripple to pay $50 million to the regulator, a sharp reduction from the $2 billion fine initially sought by the SEC.

Filed on May 8, 2025, the joint settlement request asks the US District Court for the Southern District of New York to dissolve an injunction from the August 2024 final judgment.

If approved, the SEC would receive $50 million while the remaining $75 million currently held in escrow would be returned to Ripple.

The case began in December 2020 when the SEC sued Ripple for allegedly conducting $1.3 billion in unregistered securities offerings through XRP sales.

In a mixed ruling last year, Judge Analisa Torres ordered Ripple to pay a $125 million fine after finding that institutional sales of XRP violated securities laws.

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Trump Administration Shifts Approach

The settlement comes amid changing regulatory priorities under the Trump administration. Since President Trump took office, the SEC has adopted a more lenient stance toward cryptocurrency companies, dropping several lawsuits and investigations.

This approach marks a clear departure from the aggressive enforcement actions pursued by former SEC Chair Gary Gensler during the Biden administration. Trump had campaigned with promises to support the cryptocurrency industry.

The market responded positively to the settlement news. XRP, currently the fourth-largest cryptocurrency with a market cap exceeding $132 billion, saw its price climb to $2.30, representing an 8% increase over a 24-hour period according to CoinGecko data.

Commissioner Pushback

Not everyone at the SEC supports the settlement. Commissioner Caroline Crenshaw publicly criticized the agreement in a May 8 statement, arguing it would harm the regulator’s ability to oversee crypto firms and undermine the court’s previous ruling.

“This settlement, alongside the programmatic disassembly of the SEC’s crypto enforcement program, does a tremendous disservice to the investing public,” Crenshaw stated. She warned the settlement would create a “regulatory vacuum” until a new framework is established.

Crenshaw further expressed concern that the deal “joins a line of dismissals that collectively erode the credibility of our lawyers in court who are being asked to take legal positions today contrary to the ones taken just months ago.”

The settlement is not yet finalized. According to former federal prosecutor James Filan, several procedural steps remain before the case is officially closed.

First, Judge Torres must provide an “indicative ruling” showing she agrees with the settlement terms. If this happens, the SEC and Ripple will request that the Second Circuit Court of Appeals grant a limited remand back to Judge Torres.

Once the injunction is dissolved and funds distributed according to the agreement, both parties will ask the Court of Appeals to dismiss their respective appeals, bringing the lengthy legal battle to a close.

Ripple’s executives, CEO Brad Garlinghouse and Executive Chairman Chris Larsen, who were also named in the original lawsuit, would be cleared of charges under the settlement terms.

The SEC stated that its decision to settle reflects its “current enforcement priorities” and broader regulatory approach toward the cryptocurrency industry. The agency emphasized that the agreement does not reflect a judgment on the case’s underlying merits or set a precedent for other matters.

For the cryptocurrency industry, the resolution of this high-profile case could signal how similar regulatory challenges might be handled going forward under the current administration.

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