U.S. Securities and Exchange Commission Litigation Release No. 26306, dated May 8, 2025.
The SEC has reached a settlement agreement with Ripple Labs and its executives, Bradley Garlinghouse and Christian A. Larsen, to resolve a civil enforcement action. This agreement outlines a framework for the court to potentially dissolve an injunction and release escrowed funds. A portion of the funds will satisfy a civil penalty, with the remainder returned to Ripple.
In Plain English
Imagine a company and its leaders were in a disagreement with a financial watchdog. They've now agreed to a deal. This deal asks a judge to remove a previous order against the company and to release money that was set aside. Part of that money will be paid to the watchdog as a penalty, and the rest will go back to the company. This agreement is part of an effort to update how the watchdog oversees this type of industry.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- SEC Files Settlement Agreement The Securities and Exchange Commission (SEC) announced a settlement agreement with Ripple Labs, Inc., Bradley Garlinghouse, and Christian A. Larsen on May 8, 2025. This agreement aims to resolve the Commission's civil enforcement action against them.
- Framework for Court Ruling The settlement agreement proposes that the SEC and Ripple jointly request the district court for an indicative ruling. This ruling would address whether the court would dissolve the injunction previously issued in the August 7, 2024 final judgment and order.
- Escrowed Penalty Funds The agreement also addresses the escrow account holding the $125,035,150 civil penalty imposed by the final judgment. The joint request seeks to have this escrow account released.
- Distribution of Funds Under the proposed settlement, $50 million of the escrowed funds would be paid to the SEC to fully satisfy the civil penalty. The remaining amount from the escrow would be paid back to Ripple.
- Seeking Limited Remand Following an indication from the district court that it would dissolve the injunction and release the escrowed penalty amounts as requested, the SEC and Ripple will seek a limited remand to the district court.
- Dismissal of Appeals After the district court grants the relief via remand, both the Commission and Ripple will move to dismiss their respective appeals. These appeals are currently pending in the United States Court of Appeals for the Second Circuit.
- Joint Filing with Court The settlement agreement was filed with the district court by the Commission and the defendants as part of their joint request for an indicative ruling.
- SEC's Discretionary Decision The SEC stated its decision to seek this resolution was based on facilitating its ongoing efforts to reform its regulatory approach to the crypto industry, not on an assessment of the merits of the claims alleged in the action.
- No Precedent for Other Cases Furthermore, the Commission emphasized that its decision to resolve this specific enforcement action does not necessarily reflect its position on any other pending or future cases.
The Enforcement Action
The SEC announced a settlement agreement with Ripple Labs, Inc., Bradley Garlinghouse, and Christian A. Larsen to resolve a civil enforcement action. The agreement provides for a joint request to the district court for an indicative ruling on dissolving an injunction and releasing escrowed funds totaling $125,035,150. The SEC would receive $50 million as a civil penalty, with the remainder returned to Ripple. Following the court's indication, the parties will seek a limited remand to the district court for this relief and then move to dismiss their pending appeals in the Second Circuit. The SEC's decision is based on reforming its crypto regulatory approach, not on the merits of the claims.