Key Takeaways
- U.S. District Judge Analisa Torres should now approve it
- The joint filing sought to direct $50 million from the escrow to the SEC as a civil penalty and return the remaining $75 million to Ripple
Ripple Labs and the U.S. Securities and Exchange Commission (SEC) have jointly requested the release of $125 million from an escrow account to finalise a long-running legal dispute, but their proposal hit a roadblock Thursday as a federal judge rejected the motion on procedural grounds.
The joint filing sought to direct $50 million from the escrow to the SEC as a civil penalty and return the remaining $75 million to Ripple. An escrow arrangement refers to when a third party is holding money or property until certain conditions are met for a transaction.
“The parties’ proposed resolution will preserve the resources of the Second Circuit by avoiding the need to decide appeals, obviate any remand for further proceedings in this Court, and bring 4.5 years of hard-fought litigation to an end.”
However, in earlier instances, U.S. District Judge Analisa Torres declined to approve the agreement, citing a lack of jurisdiction and procedural impropriety, despite both parties having suspended ongoing appeals in an effort to conclude the nearly five-year-long legal battle. Now, the latest request must still be approved by U.S. District Judge Analisa Torres.
The SEC first sued Ripple in December 2020, alleging the blockchain company illegally raised $1.3 billion through the sale of XRP tokens without registering them as securities. Ripple denied wrongdoing and contested the charges. In July 2023, Judge Torres ruled that XRP’s programmatic sales to retail investors on exchanges did not qualify as securities transactions. However, she found that Ripple’s institutional sales violated securities laws.
Following the mixed verdict, the SEC initially sought a $2 billion penalty, which was later reduced to $125 million. Under a revised proposal, Ripple agreed to pay $50 million, with the balance of the funds set to return to the company. The deal was meant to conclude the litigation without requiring a full remand or appellate decision.
Despite the mutual agreement, Judge Torres had earlier pointed out that the presence of unresolved appeals before the Second Circuit prevented her from issuing a binding order. “Even if jurisdiction were not in question,” she wrote, “the motion remains procedurally improper.”
Ripple CEO Brad Garlinghouse previously signalled optimism, calling the SEC’s dropped appeal in March 2025 a milestone moment.
While the dispute appears close to resolution, Thursday’s denial means both Ripple and the SEC must refile their motion once procedural hurdles are cleared. Until then, the funds remain locked, and a formal close to the case awaits judicial approval.
