The legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs has been ongoing for almost 5 years and remains one of the most watched cases where the court will decide whether XRP sales violated U.S. securities laws.
According to Cryptopolitan on the 8th (local time), after Ripple and the SEC reached a joint agreement and people thought the case was finally over, Judge Analisa Torres rejected the request because it was not properly submitted according to court rules.
This minor setback may look like a procedural delay to some, but others see it as evidence that the legal system is not prepared to handle cryptocurrency-related cases, and even the SEC is confused about applying decades-old financial laws to entirely new technologies.
The U.S. Securities and Exchange Commission filed a lawsuit in December 2020, alleging that Ripple Labs violated investor protection laws applicable to stocks or bonds by raising $1.3 billion by selling XRP tokens without registering them as securities.
While Ripple argued that XRP is a digital currency, not a security, Judge Analisa Torres ruled in 2023 that Ripple violated securities laws when directly selling XRP to institutional investors like hedge funds and investment companies.
She imposed a $125 million fine on Ripple and restrictions on the structured sale of XRP to institutions, stating that the transactions still included investment contracts classified under federal securities regulations.
However, Ripple and the SEC reached a new agreement in 2024 to reduce the fine to $50 million and remove restrictions, but the judge rejected their request due to incorrect legal formatting.
Judge Analisa Torres stated that she rejected the joint application by Ripple and the SEC because it did not follow Rule 60, which only allows modification of final judgments in rare and exceptional circumstances such as new evidence, fraud, or serious procedural errors.
The judge said Ripple and the SEC simply wanted to change the fine amount and remove restrictions after reaching a new agreement without sufficiently strong reasons to meet the high legal standard.
The cryptocurrency community believes this setback shows that the current legal system is slow and rigid regarding blockchain. While transactions, innovations, and market reactions move in real-time, court decisions and agreement approvals can take months or years.
This means investors will continue to be confused, token prices will fluctuate with rumors, and the cryptocurrency community will speculate about future court settlements based on the simple reason that small procedural errors in the legal system can cause significant delays.
The Ripple case is just one example of a larger issue where cryptocurrency regulatory rules remain unclear, as the SEC sometimes pursues massive fines and other times quietly withdraws charges with almost no explanation.
For instance, the agency sued Kraken and Coinbase for selling unregistered investment products under securities laws but withdrew cases after seemingly changing rules on a case-by-case basis.
The SEC also filed for damages against Terraform Labs after the TerraUSD stablecoin collapsed and wiped out billions in the market, but still settled with a small fine.
These cases raise questions about how enforcement decisions are actually made, especially when the damage seems much larger than the Ripple situation, and whether they reflect fair or consistent standards.
Regulatory bodies like the SEC and CFTC are still applying old rules (some written in the 1930s or 1940s) to blockchain brands, stablecoins, and smart contracts because Congress has not passed major legislation granting them authority to oversee digital assets. It's understandable that judges are uncertain about which legal standards apply in these complex disputes, developers remain confused about how to build legitimate products, and investors don't know what to invest in.
Cryptocurrency companies face a dilemma of either keeping operations small and limited to avoid regulatory issues or pursuing growth and innovation, but without clear rules, they risk expensive lawsuits and enforcement actions from the SEC.
Ripple's long and expensive legal battle especially shows how difficult it is for any company to survive in this uncertain regulatory environment, particularly for small startups that cannot afford such costly and time-consuming fights.
The judge's rejection of the Ripple and SEC settlement was based on procedural law but still felt like a missed opportunity to end the prolonged and exhausting saga. Their agreement was a rare moment of cooperation that many hoped would provide clear guidance.
And just like that, organizations, investors, and regulators are left not knowing how to drive innovation while complying with the law.
Ripple can still resubmit the application correctly using Rule 60(b), but will have to spend more time in court while investors remain anxious and developers are cautious, as XRP prices fluctuate dramatically with each new headline about the case.
Regulators have also not clarified when or how tokens like XRP will be officially classified and regulated under the law. This has transformed the entire Ripple case into a complex, prolonged saga that leaves more questions than answers about the future of cryptocurrency regulation and enforcement.
Surveillance agencies must act quickly and communicate openly to keep pace with digital finance, as they urgently need clear guardrails to understand how to apply them so that cryptocurrency communities can operate safely and plan and grow without sudden legal issues.
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