On 8 May 2025, the United States Securities and Exchange Commission (US SEC) filed a Settlement Agreement in the matter of Securities and Exchange Commission v. Ripple Labs, Inc., Bradley Garlinghouse, and Christian A. Larsen before the United States District Court for the Southern District of New York. The Settlement Agreement outlines the proposed terms to resolve the US SEC’s civil enforcement action against the defendants, originally filed on 22 December 2020.
The Settlement Agreement was filed jointly by the parties, requesting the court to issue an indicative ruling as to whether it would dissolve the permanent injunction imposed on Ripple Labs, Inc. in the court’s Final Judgment dated 7 August 2024. That judgment had included a civil penalty of USD 125,035,150 for violations under Section 5 of the US Securities Act of 1933 relating to institutional sales of XRP tokens. Ripple’s institutional sales were found to constitute an unregistered offer and sale of investment contracts.
Under the terms of the proposed resolution, the US SEC and Ripple Labs jointly request that the court allow the escrowed penalty amount to be split i.e. USD 50 million to be paid to the Commission in satisfaction of the civil penalty, and the remaining USD 75,035,150 to be released to Ripple Labs. The settlement is contingent on an affirmative indicative ruling and a subsequent limited remand from the United States Court of Appeals for the Second Circuit.
If the court provides the indication that it would grant the requested relief, the parties have agreed to pursue a limited remand to allow the District Court to enter an order dissolving the injunction and releasing the escrowed funds. Upon such action, both the US SEC and Ripple Labs would move to dismiss their respective appeals currently pending before the Second Circuit.
Importantly, the Agreement states: “The Commission’s decision to exercise its discretion and seek a resolution of this pending enforcement action rests on its judgment that such resolution will facilitate the Commission’s ongoing efforts to reform and renew its regulatory approach to the crypto industry, not on any assessment of the merits of the claims alleged in the action.” The US SEC has also clarified that this resolution should not be interpreted as precedent for other cases.
The sequence of filings suggests a procedural roadmap wherein judicial approval serves as a prerequisite to final settlement. The Agreement was filed on 08 May 2025, and action from the District Court on the indicative ruling is awaited. The ultimate dismissal of appeals will be contingent upon the court’s acceptance of the dissolution request and its enforcement.
From a legal standpoint, the Settlement Agreement falls squarely within the jurisdiction of Federal Rule of Civil Procedure 62.1, which allows courts to signal willingness to modify a judgment while an appeal is pending. It reflects a strategic use of judicial procedure to conditionally resolve complex, high-profile enforcement litigation, while retaining compliance with the statutory framework of US federal securities law.
“The Commission’s decision to exercise its discretion and seek a resolution of this pending enforcement action rests on its judgment that such resolution will facilitate the Commission’s ongoing efforts to reform and renew its regulatory approach to the crypto industry, not on any assessment of the merits of the claims alleged in the action.” — Settlement Agreement, 08 May 2025
The full document titled Settlement Agreement in Securities and Exchange Commission v. Ripple Labs, Inc., et al., Case No. 1:20-cv-10832, is available through the docket of the US District Court for the Southern District of New York.
