SEC vs. Ripple: Legal Battle Ends in Landmark Settlement, Court Finalizes XRP Classification

SEC vs. Ripple: Legal Battle Ends in Landmark Settlement, Court Finalizes XRP Classification

One of the most closely watched legal battles in crypto history has reached its final chapter. According to a filing submitted to the U.S. Court of Appeals for the Second Circuit, the SEC and Ripple have reached a mutual agreement under Rule 42(b)(1), allowing the case to be dismissed by mutual consent.

The saga began in late 2020, when the U.S. Securities and Exchange Commission accused Ripple of selling XRP tokens as unregistered securities. The case was heard in federal court in New York, where Judge Analisa Torres issued a partial ruling in July 2023 — determining that XRP sold on public exchanges did not qualify as securities, but those sold to institutional investors did. This nuanced decision was later appealed by both parties.

Initially, the SEC demanded a staggering $2 billion in penalties. However, the court ruled for a significantly lower $125 million fine. Ripple and the SEC filed cross-appeals in October 2023. In April 2025, both parties jointly requested a pause on the appeals, and by May, they announced a settlement aimed at revisiting the $125 million penalty. That proposal was rejected by the court in June, which emphasized that Ripple must comply with federal securities laws regardless of the SEC’s own stance.

With both parties dropping further appeals, Judge Torres’ 2023 decision became final and binding. It officially established that while XRP is not considered a security when traded on public exchanges, it is classified as an unregistered security when sold to institutional buyers.

Earlier, Ripple CEO Brad Garlinghouse testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, defending the company’s position and arguing that XRP should not be deemed a security. While the legal case has concluded, the broader debate over crypto regulation in the United States is far from over — and the Ripple case will undoubtedly serve as a pivotal reference point.