US federal judge rejects SEC and Ripple’s request for indicative ruling, further delaying resolution

The Southern District of New York Court dismissed the joint request from the Securities and Exchange Commission and Ripple Labs for an indicative ruling on a potential resolution in the years-long dispute between the entities.

The decision comes a week after the SEC and Ripple submitted the request after entering into a settlement agreement, where they sought an indicative ruling to lift the August 2024 injunction against Ripple and reduce the imposed penalties from $125 million to $50 million.

An indicative ruling is a statement from a district court about how it would rule on a motion if it still had jurisdiction over a case. According to Rule 62.1, a district court does not have real authority to grant or reject a request. As the SEC and Ripple each filed appeals to a final judgment in August 2024, their cross-appeals are still pending in a higher court, the Second Circuit.

“Accordingly, if jurisdiction were restored to this court, the court would deny the parties’ motion as procedurally improper,” District Judge Analisa Torres said in the Thursday order.

The judge said the parties failed to address the “heavy burden” they must overcome to vacate the injunction, adding that relief from judgment under Rule of Civil Procedure 60 should be made in “exceptional circumstances.”

What’s next

The SEC and Ripple previously said that if Judge Torres made an indicative ruling to lift the injunction against Ripple, they would jointly request a limited remand from the Second Circuit. This remand would have returned the case to the district court to formally implement their mutual agreement and dismiss their cross-appeals.

Ripple’s Chief Legal Officer Stuart Alderoty said on X that the company and the SEC will revisit this case in the court. “Nothing in today’s order changes Ripple’s wins,” Alderoty wrote.

“The meaning here is that the parties didn’t request relief under the right rule of civil procedure,” Fred Rispoli, a crypto attorney, commented on X. “So they will refile it under the correct rule but, me reading between the lines, is that Ripple and the SEC need to get on all fours and beg for relief.”

The SEC-Ripple case is one of the most prominent lawsuits in crypto history. It started in late 2020 when the regulatory agency sued Ripple over its sale of XRP tokens, which the regulator viewed as a violation of federal securities laws. The case attracted significant attention, centering on whether XRP, and cryptocurrencies in general, should be considered financial securities. 

The dispute took a significant turn when new leadership took over the SEC under pro-crypto President Donald Trump and adopted a a friendlier stance toward crypto regulation. The agency has dropped its enforcement actions against several major crypto players this year, including Coinbase and Kraken. 

The price of XRP fell 6% in the past 24 hours to trade at $2.38 as of 10:10 p.m. on Thursday ET, according to The Block’s XRP price page.

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