Ripple SEC lawsuit enters final phase with $125M penalty unresolved

Ripple's five-year SEC legal battle enters its final phase, with only the $125 million penalty and injunction scope unresolved.

The U.S. Securities and Exchange Commission's lawsuit against Ripple Labs has entered its final phase, with a $125 million civil penalty and permanent injunction terms as the last unresolved issues before full legal closure.

"The core legal question — whether XRP is a security in retail markets — was settled in July 2023, and the SEC dropped its appeal in March 2025," said Diana Chen, regulatory policy analyst at Edgen. "What remains is negotiating the final penalty mechanics and scope of the injunction."

The $125 million penalty, imposed by Judge Analisa Torres in August 2024, was far below the SEC's initial demand of nearly $2 billion. Ripple has already paid the amount into a court-controlled account, but the final order has not been entered pending resolution of the injunction terms — specifically whether Ripple's institutional sales of XRP require ongoing registration or disclosure obligations.

The resolution of these final terms would remove the last regulatory overhang that has suppressed XRP since December 2020, when the SEC first filed suit and major exchanges delisted the token. A clean resolution could unlock the next phase of institutional adoption, with spot XRP ETFs already holding $1.44 billion in assets under management as of May 2026.

The SEC filed its lawsuit against Ripple in December 2020, alleging that XRP was sold as an unregistered security. The case became the most closely watched crypto enforcement action in U.S. history, with implications for how digital assets are classified under federal securities law.

Judge Torres's July 2023 ruling created a key distinction: XRP is not a security when sold to retail investors on public exchanges, but institutional sales by Ripple did constitute unregistered securities transactions. The SEC dropped its appeal of that ruling in March 2025, cementing the legal framework.

What Remains on the Table

The two unresolved issues are the final mechanics of the $125 million civil penalty and the scope of the permanent injunction against Ripple. The SEC had originally sought disgorgement and penalties totaling nearly $2 billion. The court's August 2024 judgment reduced that to $125 million — a fraction of the agency's demand.

The injunction terms will determine whether Ripple must register any future institutional XRP sales with the SEC or provide ongoing disclosures. Ripple has argued that the 2023 ruling already provides sufficient clarity, while the SEC has pushed for broader restrictions.

Market Implications

XRP traded near $1.32 as of May 30, 2026, down roughly 26% year-to-date despite the legal progress. The divergence between regulatory clarity and price performance reflects a market waiting for the final procedural steps to conclude.

The Blockchain Association, a Washington-based crypto trade group, said the resolution of the Ripple case would set a precedent for how other digital asset projects approach SEC compliance. "This case has defined the regulatory environment for an entire asset class," a spokesperson said. "A clean resolution benefits the entire U.S. crypto ecosystem."

Spot XRP ETFs, which launched in November 2025, have already attracted $1.44 billion in AUM, with Goldman Sachs as the largest disclosed institutional holder. The next major regulatory event after the lawsuit's conclusion would be the CLARITY Act, which aims to classify XRP as a commodity under federal law and is advancing in the U.S. Senate with bipartisan support.

This article is for informational purposes only and does not constitute investment advice.