Ripple has reached an agreement to pay a $50 million fine to the US Securities and Exchange Commission (SEC) and will withdraw its cross-appeal in the ongoing legal case with the regulator.
In return, the SEC will seek to lift an injunction that currently prevents Ripple from selling XRP to institutional investors.
As noted by Ripple’s chief legal officer, Stuart Alderoty, this amount will be counted against the original $125 million penalty imposed on the company. The remaining $75 million will be held in an interest-bearing escrow account and subsequently returned to Ripple.
Alderoty characterized this agreement as a probable conclusion to the long-standing dispute that began in December 2020. All terms of the settlement are still pending final approval from the Commission, as well as court documentation and standard judicial processes.
The case was at the appeal stage following Judge Analisa Torres’s ruling, which determined that while XRP sales to retail buyers on exchanges did not breach securities laws, sales to institutions did qualify as investment contracts per the Howey Test.
The ruling resulted in financial penalties and a permanent injunction halting future institutional XRP sales.
The market found the court’s partial decision significant, clarifying that not every cryptocurrency asset sale necessarily qualifies as a securities transaction. It also introduced essential legal nuances into the ongoing discussions regarding regulatory authority in the US.
Interestingly, the announcement did not significantly impact XRP’s price, which was at $2.47—up 1% in the hour and in line with other major cryptocurrencies during that timeframe.
As for the injunction, reports from last week indicated that the conclusion of the lawsuit largely hinged on Ripple’s challenge to it.
The company contended that accepting the injunction could be seen as an admission of wrongdoing, a perception it sought to avoid due to the potential ramifications for its operations and future fundraising initiatives.
Legal analyst James Murphy, known as MetaLawMan, had previously speculated that the SEC might have accepted the original fine of $125 million without further legal proceedings. However, he observed that Ripple appeared reluctant to agree to terms it deemed inconsistent with changing regulatory policies.
The firm argued that if the SEC, under new leadership, is reevaluating the appropriateness of historical crypto enforcement in favor of more transparent regulations, then previously imposed penalties should also be reconsidered.
Moreover, various reports suggested that the SEC was exploring whether XRP could be categorized more as a commodity rather than a security, allegedly drawing comparisons between XRP and Ethereum (ETH).