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Ripple’s Ongoing legal Saga with the SEC: Key Developments

Ripple’s protracted legal struggle with the U.S. Securities and Exchange Commission (SEC) took a significant turn on May 16, 2025, as U.S. District Judge Analisa Torres decisively rejected a proposed $50 million settlement between the two parties. The unexpected ruling has generated widespread implications for Ripple and its XRP cryptocurrency, affecting market dynamics and trader sentiment alike.

Judge Rejects Ripple’s $50M Deal with SEC

Judge Torres turned down the joint proposal from Ripple and the SEC, characterizing it as “procedurally improper” and asserting that it lay beyond her judicial authority, given that the case is currently undergoing an appeals process. “Even if jurisdiction existed, the motion failed to justify the relief requested,” she clarified. This judgment represents a notable procedural hindrance for both parties, leaving them in a state of limbo.

Judge Torres rejected the SEC and Ripple’s joint motion as “procedurally improper,” expressing her intent to deny it even if jurisdiction had been established. Source: James K. Filan via X

This lawsuit, initially filed in December 2020, accused Ripple of illegally raising $1.3 billion in capital through unregistered sales of XRP. Despite experiencing some judicial victories—including a 2023 ruling that classified XRP as a non-security when sold on public exchanges—Ripple’s final legal resolution continues to elude it.

Market Responds with $160M in Derivatives Withdrawals

The outcome of the court ruling sent ripples through the Ripple crypto market, leading to immediate repercussions for XRP’s valuation. Following Judge Torres’s decision, XRP witnessed a substantial drop, plummeting over 6% to $2.37, a significant decline from its recent high of over $2.60. Analysts have pointed out that this downturn has considerably reversed the gains that XRP made post the May 8 announcement regarding a potential settlement.

According to data sourced from Coinglass and Coingecko, XRP derivatives markets responded promptly, with over $160 million in open interest withdrawn within just a 24-hour timeframe. This 3.29% reduction signifies that numerous traders are pre-emptively de-risking their positions in anticipation of ongoing legal hardships and continued regulatory uncertainty.

The majority—more than $13.5 million—of these liquidations were long positions, illuminating the market’s prevailing bearish sentiment. Moreover, activity in the XRP options market saw a dramatic decline, with open interest dropping over 76% down to just $254,000, even in the face of a brief surge in trading volume.

Ripple’s legal Team Remains Optimistic

Despite this procedural setback, Ripple’s leadership remains steadfast in its commitment to fighting the legal battle. Stuart Alderoty, the Chief legal Officer of Ripple, made it clear that the ruling does not undermine Ripple’s previous legal successes. “Nothing in today’s order changes Ripple’s wins,” Alderoty affirmed, emphasizing that this latest ruling was solely based on procedural grounds regarding the cross-appeal dismissal.

Ripple insists the order does not undermine its legal victories, portraying the situation as purely procedural and confirming intentions to collaborate with the SEC on a revised motion. Source: Stuart Alderoty via X

He went on to express that both Ripple and the SEC are united in their quest to find a resolution for the dispute, indicating that both parties are prepared to refile a corrected motion. “Ripple and the SEC are fully in agreement to resolve this case and will revisit this issue with the Court together,” Alderoty mentioned on social media.

Broader Implications for XRP Lawsuit and Crypto Regulation

legal experts are weighing in on the potential ramifications of this ruling, suggesting that it could postpone the final determination of the XRP SEC lawsuit by several months. Crypto attorney John Deaton labeled the ruling a "curveball," inferring that the judge may be resisting quick resolutions to the case. “This is the judge saying to the SEC and Ripple, ‘I’m not rubber-stamping anything. Convince me,’” Deaton noted.

Future motions will likely need to be more reflective of broader legal standards and public interests, rather than merely focusing on an agreement between the involved entities. The ongoing case remains a critical pivot in the shifting regulatory framework surrounding digital assets; it poses significant implications for how U.S. securities laws are applied to cryptocurrencies.

What’s Next for XRP Price?

The denial of the settlement has injected fresh uncertainty into predictions surrounding XRP’s price trajectory for 2025. Analysts who had previously pointed to a potential bullish rally, forecasting XRP could reach $9 or above, are now faced with a murky near-term outlook, influenced heavily by legal delays and a predominantly bearish market sentiment.

XRP was trading at around $2.37, showcasing a 1.89% decline in the previous 24 hours. Source: XRP Liquid Index (XRPLX) via Brave New Coin

With the current price hovering around the $2.30–$2.40 range serving as a temporary support, traders are keenly monitoring whether XRP can stabilize or dip further. Analysts warn that failing to maintain a position above the $2 threshold could trigger further consolidation or possibly a short-term correction.

Additionally, the XRP/BTC ratio fell by 5.3% on May 16, suggesting that XRP may struggle to keep pace with Bitcoin and Ethereum if a broader crypto rally resumes without regulatory clarity on Ripple’s future.

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Final Thoughts

The procedural rejection of Ripple’s $50 million settlement bid has reignited uncertainty at a moment when many anticipated a resolution in the XRP lawsuit. While the judge’s response did not modify existing rulings favorable to Ripple, it has delayed a closure and prompted a more defensive stance from traders.

As Ripple and the SEC gear up to return with a revised motion, investors and stakeholders throughout the crypto industry will continue to scrutinize this pivotal case—one that will undoubtedly shape the future of Ripple and set important precedents in the regulatory landscape for cryptocurrencies.

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