The Ripple Labs lawsuit was dismissed in August 2025, when the Securities and Exchange Commission and Ripple filed a joint stipulation in the Second Circuit ending both sides’ appeals. The dismissal did not wipe the case away. It left the trial court’s final judgment fully in force: a $125,035,150 civil penalty against Ripple and a permanent injunction barring future violations of Section 5 of the Securities Act.1SEC. Litigation Release No. 26369, SEC v. Ripple Labs Inc.
What Survived the Dismissal
Three things came out of the case intact. Ripple paid the full $125 million penalty. The permanent injunction against future Section 5 violations stayed on the books. And Judge Analisa Torres’s July 2023 summary judgment ruling — the substantive decision that split XRP sales into two categories — remained the operative decision in the case.2Bloomberg Law. Ripple, SEC Drop Appeal After Settlement Path Blocked by Judge
The SEC’s aiding-and-abetting claims against CEO Brad Garlinghouse and co-founder Chris Larsen were separately resolved earlier. On October 19, 2023, the agency dismissed those claims with prejudice, meaning they cannot be refiled.3Yahoo Finance. SEC Drops Charges Against Ripple Executives The August 2025 stipulation covered whatever remained of the claims against the individuals along with the appeals.1SEC. Litigation Release No. 26369, SEC v. Ripple Labs Inc.
Why the Settlement Fell Apart
The parties did not originally plan to end the case this way. Under a new SEC chair, Paul Atkins, the agency’s crypto enforcement posture shifted sharply. Enforcement actions against crypto firms fell to 13 in 2025, down 60% from the prior year, and total monetary penalties dropped to $142 million.4Cornerstone Research. SEC Cryptocurrency Enforcement Declined Under Atkins Administration
Against that backdrop, on May 8, 2025, the SEC and Ripple signed a settlement. Ripple would pay $50 million of the $125 million already sitting in escrow; the remaining $75 million would go back to the company; and the parties would jointly ask the court to dissolve the permanent injunction.5SEC. Litigation Release No. 26306, SEC v. Ripple Labs Inc.
Commissioner Caroline Crenshaw, the sole Democrat then on the Commission, dissented. She called the deal a “tremendous disservice to the investing public” and warned that if Ripple resumed selling unregistered XRP to institutions after the injunction was dissolved, “this Commission will do absolutely nothing about it.”6SEC. Commissioner Crenshaw Statement on Ripple Settlement
The settlement needed court approval. It did not get it. On June 26, 2025, Judge Torres denied the joint motion for an indicative ruling that would have dissolved the injunction and cut the penalty. Applying the “exceptional circumstances” standard from U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, she found the parties had not shown enough to override the public interest already reflected in the judgment. Section 5’s registration requirements, she wrote, are a “tentpole of our markets,” and she had originally issued the injunction based on a finding of a “reasonable probability” that Ripple would keep violating federal securities laws. The parties had not shown that finding was no longer warranted, and a shift in SEC policy did not qualify as exceptional circumstances.7U.S. District Court, S.D.N.Y. Order Denying Motion for Indicative Ruling, SEC v. Ripple Labs Inc.
With the negotiated resolution blocked, both sides chose to walk away from the pending appeals rather than press them. On August 7, 2025, they filed the joint stipulation of dismissal in the Second Circuit. That left the district court’s judgment in place and closed the case.1SEC. Litigation Release No. 26369, SEC v. Ripple Labs Inc.
The Ruling That Now Stands
Because the appeals were dropped, Judge Torres’s July 13, 2023 summary judgment order is the last word in the case. That order split Ripple’s XRP sales into categories and treated them differently under the Supreme Court’s Howey test.8U.S. District Court, S.D.N.Y. Order on Motions for Summary Judgment, SEC v. Ripple Labs Inc.
Institutional Sales Were Unregistered Securities
Ripple’s direct sales of XRP to hedge funds and other large buyers under written contracts violated Section 5. The court found those sales met all three Howey prongs: the buyers provided capital, Ripple pooled the proceeds to fund operations, and Ripple’s marketing led those sophisticated investors to reasonably expect profits from the company’s efforts to build out the XRP ecosystem. The SEC later identified $728.9 million in institutional sales for which Ripple was held liable.9Banking Dive. Ripple SEC Penalty Request
Programmatic Exchange Sales Were Not
Ripple’s “programmatic sales” — XRP sold through blind bid-ask trades on digital asset exchanges — did not qualify as investment contracts. Exchange buyers had no way of knowing whether they were buying from Ripple or from someone else, so they could not reasonably expect that their money would fund Ripple’s efforts. Judge Torres emphasized that “XRP, as a digital token, is not in and of itself” a security; the analysis had to focus on “the economic reality and totality of circumstances” of each type of sale.10Clifford Chance. Initial Reflections on the SEC v. Ripple Decision
The court also found that XRP paid to employees and developers as compensation did not satisfy Howey‘s “investment of money” prong, since no one was paying cash for the tokens.8U.S. District Court, S.D.N.Y. Order on Motions for Summary Judgment, SEC v. Ripple Labs Inc.
The Penalty and Injunction
In March 2024 the SEC asked for a penalty of nearly $2 billion.9Banking Dive. Ripple SEC Penalty Request On August 7, 2024, Judge Torres entered a final judgment ordering $125,035,150 in civil penalties and permanently enjoining Ripple from future Section 5 violations. She denied the SEC’s request for disgorgement, noting the institutional investors did not appear to have suffered monetary harm, and issued a narrower injunction than the blanket ban on institutional sales the SEC had sought.11Manatt. Ripple Labs Ordered to Pay $125 Million Civil Fine
What the Appellate Courts Never Decided
The dismissal matters as much for what it did not produce as for what it did. Both the SEC’s appeal and Ripple’s cross-appeal ended without a merits ruling. That leaves Judge Torres’s programmatic sales holding as a district court decision — persuasive, widely cited, but not binding precedent above that level.
Other trial judges have already disagreed with the framework. In SEC v. Terraform Labs, Judge Jed Rakoff wrote that “Howey makes no such distinction between purchasers” and rejected the idea that buying on a secondary market changes the analysis.12Ballard Spahr. Terraform Versus Ripple: Courts Split on Whether Cryptocurrency Is a Security In the SEC’s case against Coinbase, Judge Katherine Failla also declined to follow Ripple and later granted interlocutory appeal specifically because of the “substantial ground for difference of opinion” the ruling created.13Katten. Crypto in the Courts: Five Cases Reshaping Digital Asset Regulation That Second Circuit appeal was itself dismissed by stipulation on March 4, 2025.14U.S. Chamber of Commerce. SEC v. Coinbase Inc.
So the biggest legal question the case posed — whether a token sold on a public exchange can be an unregistered security — still has no answer from a federal appeals court.
What Changed for Ripple and XRP After the Case Closed
With the litigation resolved, several things moved quickly on the business and regulatory side.
In mid-2025 the SEC adopted generic listing standards for commodity-based cryptocurrency exchange-traded products, and spot XRP ETFs followed. By late 2025, products from REX-Osprey, Canary Capital, Bitwise, Grayscale, and Franklin Templeton were trading on NYSE Arca. As of June 2026, seven U.S. spot XRP ETFs held a combined $1.53 billion in assets, with Goldman Sachs, Millennium, and Citadel among the institutions reporting XRP ETF positions in 13F filings.15Ripple. XRP ETFs: The Institutional Era Has Begun
On December 12, 2025, the Office of the Comptroller of the Currency granted Ripple conditional approval for a de novo national trust bank charter under the name Ripple National Trust Bank, part of a batch of five crypto-related trust charters approved that day. The approval carries standard OCC conditions and lapses if the bank is not opened within 18 months.16OCC. OCC Grants Conditional Approval for Ripple National Trust Bank17Banking Dive. OCC Approves National Trust Bank Charters for Crypto Firms Ripple’s dollar-backed stablecoin, RLUSD, crossed $1 billion in market capitalization within its first year.18Yahoo Finance. Ripple US Banking License and Market Outlook
The Senate Banking Committee has advanced the Digital Asset Market Clarity Act, which would formally classify certain digital assets as non-securities and would bar the SEC from classifying a digital asset as a security if a U.S. court has already issued a non-appealable judgment to that effect. The bill stalled in January 2026 and faces over 130 proposed amendments.19U.S. Senate Banking Committee. Digital Asset Market Clarity Act Section-by-Section Summary18Yahoo Finance. Ripple US Banking License and Market Outlook
The Ripple Labs lawsuit is over. Ripple paid a nine-figure penalty and is still subject to a permanent injunction against Section 5 violations. Judge Torres’s line between institutional and programmatic sales remains where the case left it, untested above the district court, while the company operates in a regulatory environment that looks very different from the one that produced the December 2020 complaint.