The US Securities and Exchange Commission (SEC) and Ripple Labs have jointly asked a federal court in Manhattan to dissolve a previous injunction and release $125 million currently being held in escrow.

The request, filed on Thursday in the Southern District of New York, marks the latest step toward a potential settlement in the nearly five-year legal battle over Ripple’s alleged unregistered sale of securities.

Ripple Nears Settlement in SEC Case

In their motion, both parties said they had reached a proposed agreement that would resolve the remaining financial penalties in the case.

As part of that deal, $50 million would be paid to the SEC as the final penalty, and the remaining $75 million in escrow would be returned to the blockchain company. To complete this process, they are asking the court to lift the injunction that was included in the August 2024 final judgment, which had barred Ripple from violating securities laws and ordered the $125 million civil penalty.

The money has been in escrow since September 2024, when the court stayed enforcement of the penalty to allow for appeals. Both the SEC and Ripple filed notices of appeal last October, but those proceedings have been paused since April to give the parties time to pursue a settlement.

Exceptional Circumstances

A similar request to modify the judgment was made in May but was rejected by Judge Analisa Torres because the filing didn’t explain why exceptional circumstances warranted the change. In Thursdays updated filing, however, the SEC and Ripple have argued that such circumstances do exist, namely, that the revised penalty and dissolution of the injunction are essential to finalize their settlement, avoid lengthy appeals, and conserve court resources.

The filing also notes that the proposed changes would not alter the courts key rulings from July 2023, which found that Ripples XRP token sales to institutional investors violated securities laws, but that its broader programmatic sales did not. Those rulings will remain in effect and continue to apply to both parties.

The SEC and Ripple say the new agreement reflects a fair compromise that avoids litigation risk and allows both sides to move on. It also aligns with recent actions taken by the SEC under Trump leadership, which has dismissed other high-profile crypto cases, including those involving Coinbase, Consensys, and Kraken, in efforts to shift regulatory strategy.

If the judge agrees to the joint request, the case would be sent back from the Second Circuit Court of Appeals to the district court, where the funds could then be distributed according to the proposed terms.