In a pivotal development in the long-running legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), both parties have jointly requested that a federal court dissolve a longstanding injunction related to XRP sales and authorize the release of $125 million currently held in escrow.

The proposed agreement, filed in the Southern District of New York on Thursday, outlines that Ripple will pay a $50 million civil penalty to the SEC. The remaining $75 million in escrowed funds would revert back to Ripple. If approved, this marks a significant step toward the conclusion of a legal saga that began nearly four years ago.

A Deal Years in the Making

The SEC’s lawsuit, originally filed in December 2020, accused Ripple of conducting an unregistered securities offering by selling XRP tokens to institutional investors, raising $1.3 billion in the process. Ripple has consistently denied these allegations, claiming that XRP should not be classified as a security.

The legal battle drew global attention, impacting not just Ripple’s operations but the broader crypto landscape. Industry players have viewed the case as a bellwether for how U.S. regulators would classify and enforce digital asset offerings.

In 2023, Ripple scored a partial legal victory when Judge Analisa Torres ruled that programmatic sales of XRP on public exchanges to retail investors did not qualify as securities transactions. However, she did find that Ripple violated securities laws with its institutional sales of XRP, leaving the company still partially liable.

Originally, the SEC sought a hefty $2 billion penalty from Ripple, but after negotiations and shifting leadership within the agency, the figure was significantly reduced to $125 million.

Why the Escrow Release Matters

The joint motion filed by Ripple and the SEC not only proposes a $50 million settlement payment, but also requests the court to lift the injunction that has restricted Ripple’s XRP-related activities and to release the escrow funds that had been frozen during the litigation.

This motion must still receive approval from Judge Torres, who has presided over the case since its inception. Her prior rejection of a motion for an indicative ruling—due to ongoing appeals—signals that while both parties may be ready to move on, the court’s procedural standards remain a significant hurdle.

Despite the past procedural rejection, both Ripple and the SEC have since taken steps to suspend their appeals, clearing a path for this final resolution.

A Shifting Regulatory Environment

This latest move from the SEC represents a noticeable departure from its previously aggressive stance on crypto under former Chair Gary Gensler. Since the change in U.S. presidential administration, the SEC—now under President Donald Trump’s leadership—has scaled back its enforcement actions in the crypto sector.

Several high-profile lawsuits initiated under the previous administration have been quietly dropped, suggesting a strategic shift in how the U.S. approaches digital asset regulation.

However, not everyone at the SEC is on board with this direction. In May 2025, Commissioner Caroline Crenshaw publicly criticized the agency’s retreat from aggressive crypto oversight, warning that it could put investors at risk.

Nonetheless, Ripple’s proposed settlement could serve as a blueprint for how similar cases may be resolved in a more negotiation-driven regulatory climate.

Ripple’s Broader Global Momentum

While the legal wrangling in the U.S. has played out, Ripple has continued to make regulatory and operational strides globally. Most recently, the Dubai Financial Services Authority (DFSA) approved Ripple’s RLUSD stablecoin for use within the Dubai International Financial Centre (DIFC). This approval marks Ripple’s second major regulatory win in the region this year, reinforcing its strategy to expand in crypto-friendly jurisdictions.

These international approvals offer a stark contrast to Ripple’s legal entanglements in the U.S., and they position the company to lead the charge in cross-border blockchain-based payments—particularly as digital assets gain traction in regulated financial hubs outside the U.S.

Market Reaction and XRP Price Impact

Following the news of the proposed settlement, XRP was trading at $2.13, reflecting a 5.2% drop over the last 24 hours, according to CoinGecko. While the market had initially rallied on signs of legal closure, the procedural uncertainty around Judge Torres’ final decision may be contributing to short-term price volatility.

Still, many investors see the joint filing as a positive sign that Ripple is approaching the finish line in its legal fight, removing a long-standing cloud of uncertainty that has weighed heavily on XRP’s valuation and adoption prospects.