Ripple vs. SEC: Legal Expert Suggests Surprising Reason Behind Case Delay

The U.S. Securities and Exchange Commission (SEC) continues to delay dismissing its lawsuit against Ripple, and a leading crypto lawyer has a theory as to why. According to financial services law expert James Murphy, widely known as Metalawman, the prolonged legal battle may not be solely due to the SEC’s reluctance but rather strategic moves from Ripple itself.

Ripple’s Strategic Negotiation?

On March 1, Murphy shared his perspective on X (formerly Twitter), stating:“I have a theory about the SEC’s unexplained delay in dismissing the Ripple case.”

He suggested that Ripple could be negotiating with the SEC to vacate parts of Judge Analisa Torres’ ruling. While the decision was largely favorable to XRP holders, certain elements, including the finding of securities law violations and the accompanying injunction, might be concerning for Ripple’s future business plans.

Why Would Ripple Push for Changes?

Judge Torres ruled in July 2023 that XRP was not security in retail sales but was classified as such in institutional transactions. Ripple was fined $125 million in August 2024, significantly lower than the SEC’s original $2 billion demand. However, Murphy believes Ripple may seek to remove negative legal precedents that could hinder future financial activities, such as an exempt securities offering or an IPO.

SEC’s Potential Stance on Settlement

Murphy speculated that the SEC might be open to a settlement where both parties withdraw their appeals, and Ripple pays the $125 million penalty. He explained:

“I believe the SEC would have accepted a settlement—where both sides dismiss their appeals and the SEC takes the $125 million penalty—in a heartbeat. So, it makes sense (to me at least) that Ripple could be negotiating for a better deal than that.”

While this theory remains speculative, it aligns with Ripple’s potential long-term objectives of clearing regulatory hurdles and securing its standing in the financial sector.

Will a Judge Approve the Settlement?

Even if Ripple and the SEC reach an agreement, Murphy warned that a judge’s approval is not guaranteed. He noted that federal judges have become increasingly hesitant to vacate prior rulings as part of settlements, a practice that was more common in the past but is now met with greater judicial scrutiny.

The ongoing battle between Ripple and the SEC has major regulatory implications for the cryptocurrency industry. Whether Ripple succeeds in negotiating a more favorable outcome remains to be seen, but the case's resolution will undoubtedly shape the future legal landscape for digital assets.

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