SEC Seeks Approval for Ripple Settlement Amid Disagreement

The U.S. Securities and Exchange Commission (SEC) has filed a motion to settle its long-standing legal battle with Ripple Labs, despite internal opposition from one of its commissioners. The proposed settlement, outlined in a May 8 court filing, aims to resolve the case that has been ongoing since December 2020.

Under the agreement, Ripple would be allowed to resume sales of its XRP token without violating securities laws. Additionally, the company would recover $75 million of the $125 million civil penalty previously held in escrow. The move follows a 2023 ruling by Judge Analisa Torres, who determined that while XRP sales to public exchanges did not violate securities laws, sales to institutional investors did.

The settlement, if approved, would see the $125 million penalty split, with $50 million allocated to the SEC and the remainder returned to Ripple. However, the settlement explicitly states that neither party will seek to amend the 2023 summary judgment, which limits the SEC's ability to challenge XRP sales to public exchanges.

Despite the agreement, the settlement has faced criticism within the SEC. Commissioner Caroline A. Crenshaw expressed strong opposition, calling it “a tremendous disservice to the investing public.” In a dissent posted on the SEC's website, Crenshaw warned that the settlement could undermine the SEC’s authority over crypto companies and create an environment where Ripple could resume institutional sales of XRP without proper registration.

Crenshaw also voiced concerns that the settlement could signal a broader pullback in the SEC’s enforcement efforts regarding cryptocurrencies, leaving investors vulnerable. Nonetheless, the SEC maintains that the settlement is fair and in the public interest, highlighting that the case has already provided clarity on the legal parameters surrounding token sales.

If the court approves the settlement, both Ripple and the SEC will formally dismiss their appeals, bringing closure to one of the most high-profile cases in the cryptocurrency space. However, Crenshaw's dissent may spark further debates about the future regulation of digital assets.