Ripple's $125M XRP Penalty Survives on How It Sold to Institutions

The $125,035,150 penalty Ripple Labs owes the SEC is still standing, and it comes down to who was buying XRP. U.S. District Judge Analisa Torres found in July 2023 that Ripple's direct sales to institutional buyers were unregistered investment contract transactions, while the programmatic exchange sales examined in the case were not. That divide is why the fine outlived the litigation.

Institutional buyers contracted straight with Ripple, and Torres concluded they could reasonably expect profits from Ripple's work to develop uses for XRP and strengthen its market — the key step in the Howey test. Exchange orders, by contrast, never told buyers whether Ripple or another holder was on the other side. Torres didn't find that same expectation on the record before her, and her ruling left the legal treatment of other secondary-market XRP trades unsettled.

The dollar figures moved sharply along the way. The SEC filed on Dec. 22, 2020, alleging Ripple and two executives raised more than $1.3 billion through an unregistered offering that started in 2013. The agency then sought $876,308,712 in civil penalties, the same amount again in disgorgement and $198,150,940 in prejudgment interest.

On Aug. 7, 2024, Torres denied disgorgement and interest and set the $125,035,150 penalty, calculated on 1,278 institutional sales transactions. She added a permanent injunction barring further violations of the Securities Act's registration provisions.

The two sides tried again in May 2025, proposing to shrink the payment, down to $50 million, and scrap the injunction. Torres rejected the request on June 26, finding they hadn't established grounds to alter the final judgment. On Aug. 7, 2025, the SEC and Ripple dismissed their appeals, leaving the penalty and injunction in force with no appellate ruling on her reasoning.