The years-long legal feud between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) is finally inching toward a conclusion in 2025. What began in 2020 as a major regulatory crackdown on cryptocurrency may be coming to a close, but not without a few last-minute hurdles. Despite an official $50 million settlement being agreed upon, recent procedural issues in court have temporarily stalled Ripple’s attempts to fully clear its path forward. Still, optimism remains that the case will wrap up in the coming months, potentially reshaping the legal status of XRP and providing clarity for the broader crypto landscape.

How It All Started

The saga began in December 2020 when the SEC filed a lawsuit against Ripple Labs, claiming the company illegally raised over $1.3 billion through the sale of XRP, which the regulator classified as an unregistered security. Ripple countered by arguing that XRP is a digital asset similar to Bitcoin and Ethereum, which the SEC had previously stated were not securities. This distinction became the basis of a heated legal debate over how digital currencies should be treated under U.S. securities laws.

Over the next few years, both sides exchanged arguments, filed appeals, and racked up court dates. The central question remained: Was Ripple’s sale of XRP to institutional and retail investors in violation of securities laws?

2023 Court Ruling Splits the Difference

In 2023, U.S. District Judge Analisa Torres issued a pivotal ruling that split the case in two. She determined that Ripple’s direct sales of XRP to institutional investors did violate securities laws, but its programmatic sales—those made through exchanges to retail investors—did not. This partial win for Ripple energized the crypto community and set an important legal precedent. Still, it didn’t bring the lawsuit to an end, as the SEC promptly filed an appeal in early 2025.

Appeals Dropped, Settlement Negotiated

In a surprising turn of events, both Ripple and the SEC decided to drop their respective appeals on March 19, 2025. This move was widely seen as a signal that both parties were ready to move on. The decision followed a change in the political climate and regulatory approach under a new U.S. administration, which has taken a more balanced view of the crypto industry.

Then, on May 8, 2025, Ripple and the SEC formally reached a settlement. The agreement required Ripple to pay $50 million as a reduced fine for its earlier violations, while also seeking approval from the court to lift the ban on XRP sales to institutional investors. Ripple had initially been ordered to pay $125 million in penalties, but the revised settlement allowed the remainder of that amount to be returned to the company. The joint request also included a motion to release the funds held in escrow.

Judge Torres Delays Ruling Over Technicality

However, on May 15, Judge Torres declined to approve the motion. Importantly, she did not reject the settlement itself, but rather found the request to be “procedurally improper.” In simpler terms, the filing didn’t follow the correct legal process. This caused a minor setback for Ripple, leading to a brief drop in the price of XRP from $2.65 to $2.30 over a few days.

Despite this, Ripple’s legal team emphasized that the delay was purely procedural and didn’t affect the broader outcome of the case. Stuart Alderoty, Ripple’s Chief Legal Officer, clarified that previous court wins—such as the classification of XRP not being a security for public sales—remained intact. Legal analysts expect Ripple and the SEC to refile the motion within the proper framework over the next few weeks, followed by a quick decision from the court.

What Happens Next?

Ripple and the SEC are now working on a new, correctly formatted motion. If approved, the Appeals Court will return the case to Judge Torres, who can then finalize the agreed-upon settlement. Once the $50 million is paid and the ban on XRP institutional sales is lifted, both parties are expected to submit a request to dismiss all remaining appeals—officially bringing the case to a close.

This week may prove crucial, as the SEC is scheduled to hold a closed-door meeting on May 22. While no details have been shared publicly, investors and legal experts are hoping for more clarity. A favorable outcome could not only close the Ripple case but also reignite discussions about a potential XRP exchange-traded fund (ETF).

In many ways, this legal battle has become a test case for how U.S. regulators handle crypto. Its conclusion could provide long-awaited clarity and open the door for more mainstream adoption of digital assets like XRP.