The US Securities and Exchange Commission (SEC) filed a proposed settlement agreement with Ripple, CEO Brad Garlinghouse, and Executive Chairman Chris Larsen to resolve the Commission’s longstanding civil enforcement action against the company and its executives.
In a filing submitted on May 8, the SEC and the defendants jointly requested that the US District Court for the Southern District of New York issue an indicative ruling on whether it would dissolve the injunction from its Aug. 7, 2024, final judgment.
Next steps
The request also asks the court to order the release of the $125 million civil penalty currently held in escrow. Under the proposed terms, Ripple would pay $50 million to the SEC in satisfaction of the judgment, while the escrow would return the remaining $75 million to the company.
The SEC stated that its decision to seek resolution reflects its current enforcement priorities and the broader context of its regulatory posture toward the crypto industry. The regulator emphasized that the settlement does not reflect a judgment on the case’s underlying merits or imply a precedent for other matters.
The final decision is based on Ripple’s agreement to pay a $50 million civil penalty and the expected withdrawal of all appeals.
According to attorney James Filan, the process involves additional steps. First, Judge Analisa Torres must provide an indicative ruling stating whether she would dissolve the injunction and approve the proposed fund distribution.
If such a ruling is issued, the SEC and Ripple would jointly request a limited remand from the US Court of Appeals for the Second Circuit to return the case to Judge Torres. Upon granting the remand, the parties would file a motion in the district court formally requesting the relief laid out in the settlement.
Both parties would move to dismiss their respective appeals in the Second Circuit, which would conclude the case following the dissolution of the injunction and the distribution of the funds.
Concluding the longstanding legal battle
The original case, filed in December 2020, alleged that Ripple’s sales of XRP constituted unregistered securities offerings in violation of federal law.
The SEC also accused Garlinghouse and Larsen of aiding and abetting those violations. The case has since become one of the highest-profile legal battles in the crypto industry, with key rulings on the classification of XRP transactions and extensive appellate proceedings.
In October 2024, the SEC filed a notice of appeal challenging the district court’s judgment, followed by Ripple’s cross-appeal.
The Commission submitted its opening brief in January 2025 and set deadlines for responses from Ripple and its executives. However, both sides jointly moved to hold the appeals in abeyance on April 10, citing an agreement in principle to resolve the case.
That motion, filed with the Second Circuit, outlined a settlement framework that would address the SEC’s claims against Ripple, the company’s counterclaims, and the individual charges against Garlinghouse and Larsen.
The action suspended all appellate deadlines pending further court action.
The proposed resolution, filed jointly by the SEC and the defendants, represents a virtual conclusion to over four years of litigation. The parties now await the district court’s initial response to their request for an indicative ruling. The SEC’s filing does not set a timeline for Judge Torres’ decision.
