XRP Falls 4.5% Amid New Challenges in Ripple-SEC Lawsuit

The XRP community, long accustomed to courtroom headlines, was met with fresh uncertainty this week. On May 15, Judge Analisa Torres denied a joint motion by Ripple and the U.S. Securities and Exchange Commission (SEC) that sought to finalize a proposed settlement. Within hours of the news, XRP dropped by 4.5%, dipping to $2.35 after facing rejection at the $2.60 level earlier in the week.

At first, the move seemed like a sudden change in direction. But in truth, it was more procedural than anything else. While the decision doesn't impact the underlying ruling that XRP is not a security when sold on exchanges, it delays closure, and markets don’t like delays.

Court Denies Request Due to Legal Issues

Judge Torres’s denial of the joint motion centered around legal procedure, not the merits of the settlement. In her order, the judge emphasized that the request, though styled as a motion for settlement approval, failed to comply with Rule 60 of the Federal Rules of Civil Procedure. That rule sets a high bar—relief from a final judgment requires “exceptional circumstances.”

The court found that Ripple and the SEC had not even cited Rule 60 in their filing, nor had they made an attempt to meet the burden it requires. Notably, the motion sought to vacate an existing injunction against Ripple and reduce its civil penalty from $125 million to $50 million. While both parties were aligned on these terms, the procedural shortcut was deemed “improper” by the court.

Legal analysts like James Filan and Bill Morgan had warned that this outcome was possible. Morgan even pointed out that the judge must determine if the proposed settlement is truly in the public’s interest, especially after five years of legal wrangling and substantial court resources already spent. From her perspective, a quick procedural shortcut might cheapen the gravity of those efforts.

Ripple Reacts as XRP Drops

Despite the headlines, Ripple’s leadership hasn’t panicked. Chief Legal Officer Stuart Alderoty quickly addressed the ruling on X, emphasizing that none of Ripple’s prior wins, especially the classification of XRP, were in jeopardy. "This is about procedural concerns," he clarified. "Ripple and the SEC are aligned and will revisit the issue with the court together."

That public reassurance helped contain what might have escalated into a broader market selloff. XRP didn’t collapse—it experienced a modest decline. Nevertheless, traders and speculators in the crypto space are closely monitoring key technical levels. Currently, XRP is testing a significant trendline; a break below this threshold could open the door to further downside, with the next notable support zone between $2.19 and $1.79.

Market sentiment remains a mix of cautious optimism and underlying frustration. On-chain data from Coinglass reveals a 6% drop in open interest, now at $5.08 billion, accompanied by $22.86 million in liquidations, predominantly from long positions. This suggests that some market participants had positioned themselves for a more definitive legal resolution and were caught off guard by the delay.

Next Steps in the Lawsuit

So what happens now? Judge Torres’s ruling effectively sends Ripple and the SEC back to the drawing board. The court has made it clear that any further attempt to modify the final judgment must follow the correct legal framework and justify changes with convincing arguments.

According to Bill Morgan, the next logical step would involve the parties requesting a limited remand from the Court of Appeals. If granted, they can then refile the motion properly before Judge Torres. This would allow for the injunction to be lifted and the penalty reduced—exactly what the original motion attempted, just with procedural precision.

Legal setbacks like this aren’t new in drawn-out cases. But the court’s tone suggests it's not the idea of settlement that's the problem—it’s how the request was structured. As such, there's a realistic chance the issue could be resolved relatively quickly, assuming Ripple and the SEC align their legal approach with the court’s guidance.

The Case Remains on Course

Despite the commotion surrounding Judge Torres’ latest decision, the actual effect on Ripple’s legal position is minimal. The main points remain: XRP is not a security, and both Ripple and the SEC are still aiming for a settlement. The change is procedural—important, but not a major setback.

For XRP holders, the ruling is a reminder of how quickly momentum can shift in crypto. One filing error can wipe out billions in value. Still, the case has proven to be resilient. A resolution is still within reach; it just needs a better envelope and the right stamp.