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

Ripple’s attempt to finalise a deal with the US Securities and Exchange Commission has been stalled after a federal court dismissed their combined request as procedurally flawed. Judge Analisa Torres of the United States District legal for the Southern District of New York released the ruling on May 15, which was originally revealed by attorney James Filan on X, along with the accompanying legal filings. Filan stated that Judge Torres “denied the parties’ motion for an indicative ruling.”

The motion was declared “procedurally improper” because it was not submitted under Rule 60, which requires proof of unusual circumstances to change a final order.

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The request, which was denied on May 8, attempted to dissolve an injunction and cut a $125 million civil penalty to $50 million. Both parties had agreed to the settlement as part of a larger effort to settle the matter while appeals were still continuing. However, the judge’s decision effectively kills that scheme until the motion is properly refiled.

Stuart Alderoty, Ripple’s chief legal officer, addressed the crypto community immediately after, stressing that the court’s decision has no bearing on the company’s other legal successes, notably the 2023 finding that XRP is not a security in programmatic sales.

This concerns procedural issues related to the dismissal of Ripple’s cross-appeal,” he wrote on X, highlighting that Ripple and the SEC have reached an agreement to settle the case.

Commenting on the setback, attorney Fred Rispoli stated that both parties must now “do it the hard, messy way” by formally demanding relief under the applicable legal rule.

The SEC sued Ripple in 2020, alleging that it sold XRP as an unregistered security, kicking off a protracted court battle. In 2023, the SEC issued a partial ruling determining that institutional sales qualify as securities. However, it was determined that retail sales did not violate security regulations. 

The delay has upset market sentiment. XRP lost almost 7% in the last day, while CoinGlass data shows a 9.4% reduction in open interest to $4.93 billion. Long positions worth more than $21 million were cancelled as traders reacted to the court’s decision and the resulting uncertainty. Traders are closely watching XRP’s next move as it retests support at $2.36. 

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