The decision led to a significant drop in the value of XRP, reversing recent progress and causing traders to reassess their positions more carefully.
Judge Rejects Ripple’s $50M Deal with SEC
Judge Torres refused the combined plea from Ripple and the SEC because it was not appropriate at this stage in the case, which is currently being appealed. She noted that even if jurisdiction were available, the motion did not provide sufficient reasons for the requested relief. Essentially, she dealt a substantial procedural setback to both parties.
The legal action, which was initially commenced in December 2020, claimed that Ripple had made $1.3 billion by selling XRP without proper registration. Despite some favorable partial rulings for Ripple, such as a 2023 verdict stating that XRP is not considered a security when traded on public markets, a definitive resolution to the case has yet to be reached.
Market Responds with $160M in Derivatives Withdrawals
The recent court decision significantly influenced the Ripple crypto market. Consequently, the value of XRP dropped by approximately 6% to $2.37, falling from its weekly peak above $2.60. Analysts observe that this decline wiped out almost all the price increases seen after the May 8 disclosure about a potential settlement.
Based on information from Coinglass and Coingecko, the XRP derivatives market showed quick response, withdrawing over $160 million in open interest within a single day. This 3.29% drop suggests that numerous traders are reducing their exposure, likely due to the expectation of extended legal battles and regulatory uncertainty.
Most of these liquidations (over $13.5 million) were long positions, showing that the market is generally pessimistic. At the same time, activity in the XRP options market dropped significantly, with open interest falling by 76% to $254,000, even though there was a temporary increase in volume.
Ripple’s Legal Team Remains Optimistic
Regardless of the procedural issue, Ripple remains undeterred. Stuart Alderoty, Ripple’s Chief Legal Officer, underscored that this ruling does not diminish Ripple’s previous legal triumphs. “Today’s decision doesn’t alter our past victories,” he stated, explaining that the rejection was solely due to procedural matters concerning the dismissal of Ripple’s counter-appeal.
Ripple and the Securities and Exchange Commission (SEC) agree they want to settle their disagreement. They plan to resubmit an amended motion regarding the case to the court jointly. This is what lawyer Stuart Alderoty stated on his social media platform, X (formerly Twitter).
Broader Implications for XRP Lawsuit and Crypto Regulation
Legal professionals predict that this judgment might extend the timeline for wrapping up the XRP lawsuit with the SEC by a few months. Crypto lawyer John Deaton referred to the ruling as an unexpected twist, implying the judge may be resisting efforts to expedite the case’s conclusion. Essentially, Deaton stated that the judge is indicating to both the SEC and Ripple that they need to provide compelling evidence rather than simply moving forward without question.
Instead, he mentioned that upcoming submissions might require consideration of wider legal principles and the general public’s welfare, not just the terms of the deal between the involved parties.
In simpler terms, the Ripple lawsuit serves as a significant turning point in the development of regulations for cryptocurrencies. Although enforcement actions by the Securities and Exchange Commission (SEC) have become less strict under Chairman Paul Atkins, who was appointed during the Trump administration, the Ripple lawsuit continues to play a crucial role in determining how U.S. securities laws will be applied to digital assets.
What’s Next for XRP Price?
The abandoned proposal has added new doubt to the projected XRP prices for 2025. Previously, certain experts predicted a possible surge towards $9 or more, but the immediate forecast is now shrouded in uncertainty due to potential legal hold-ups and a general pessimism in the market.
In this price range of around $2.30-$2.40, investors are keeping a close eye on XRP to determine if it will find stability or potentially fall lower. Traders predict that if XRP fails to maintain its position above the $2 mark, it could lead to more consolidation or even a brief market correction.
Furthermore, it appears that the XRP/BTC rate dropped by 5.3% on May 16th, implying that XRP might not perform as well as Bitcoin and Ethereum in the event of a wider crypto market surge, if there remains no regulatory clarity for Ripple.
Final Thoughts
The court’s decision to dismiss Ripple’s $50 million settlement proposal has once again raised questions about the legal outcome, as some had thought the recent update on the XRP lawsuit pointed towards a swift resolution. Although the ruling did not change previous decisions in favor of Ripple, it has postponed the conclusion and prompted traders to adopt a more protective stance.
As Ripple and the Securities and Exchange Commission prepare to present their updated proposal, the investment world and the wider crypto community will closely monitor the developments in this pivotal case – with a keen interest in understanding its implications for future updates regarding Ripple XRP and regulatory standards across the industry.
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2025-05-18 00:18