XRP Hits Denial Phase As Judge Rejects Ripple-SEC Motion

Key Insights:

• XRP enters the denial phase, echoing past pre-crash on-chain sentiment trends.
• Judge Torres rules Ripple-SEC motion procedurally improper under Rule 60.
• Ripple says XRP remains non-secure despite the latest court rejection.

XRP price recently dropped to $2.42. This happened after a New York federal judge rejected a request from Ripple Labs and the SEC to modify a previous ruling.

The decision caused uncertainty in the market, leading to a price decline. The May 15 ruling halted efforts to lower Ripple’s $125 Million penalty. It also kept restrictions on institutional XRP sales in place.

Judge Analisa Torres rejected the motion, calling it “procedurally improper.” She stated that the parties had not shown the exceptional circumstances to vacate a final judgment under Rule 60.

The denial keeps Ripple’s previous injunction and full penalty intact, stalling legal momentum toward resolution.

XRP drops as bulls face fresh legal hurdle

According to on-chain data, XRP has entered the “denial” phase in its Net Unrealized Profit/Loss (NUPL) metric. Glassnode data showed that Ripple trades in the 0.5–0.75 NUPL range. This range is historically linked to market tops. Investors still have gains, but their sentiment is weakening.

In past cycles, XRP’s entry into this zone has led to significant declines, such as in 2018 and 2021. The price has recently returned from its highs and fallen below $2.50. Traders are now closely monitoring the market. They are looking for signs of further capitulation.

One trader on X, CW, noted that XRP still respected key trendline support and called the recent pullback a “perfect retest.” Still, price action remains vulnerable to macro sentiment, as legal uncertainty returns to dominate headlines.

Ripple’s legal officer: “Nothing changes” for XRP

Ripple’s Chief Legal Officer, Stuart Alderoty, responded swiftly to the setback. Posting on X, he clarified that Judge Torres’ denial did not reverse the prior ruling that XRP is not a security. “Nothing in today’s order changes Ripple’s wins,” he wrote.

Alderoty framed the ruling as a procedural issue tied to how Ripple and the SEC attempted to finalize their earlier agreement. The two sides had submitted a joint motion to reduce the penalty and dissolve the injunction contingent on a successful appeal withdrawal.

However, Judge Torres concluded that the motion should have followed Rule 60, which requires proof of exceptional conditions. The case’s current posture stems from a proposed agreement on May 8.

The agreement aimed to settle the dispute across the district and appellate courts. It included a provision to pay only $50 Million of the original penalty. Judge Torres declined to entertain the request without proper procedural compliance.

“Curveball” delays Ripple-SEC truce

Pro-XRP attorney John Deaton described the ruling as a “curveball” during a livestream with supporters. While some downplayed the development, Deaton urged caution. “Some people are minimizing this. I am not gonna minimize this,” he said.

The ruling reasserts Judge Torres’ insistence on adhering to legal standards before modifying her original judgment. Despite the pause, Alderoty said Ripple and the SEC remained aligned on revisiting the matter.

Both parties must submit a properly styled motion in the coming weeks. Despite the pause, Alderoty said Ripple and the SEC remained aligned on revisiting the matter. Both parties must submit a properly styled motion in the coming weeks.

Sentiment fades as technicals break down

While legal arguments continue, XRP’s market structure shows signs of weakening. The recent price drop below $2.50 has fueled concerns of a deeper retracement. Momentum indicators have also turned neutral, with speculative interest waning.

The futures market has cooled, and the earlier optimism surrounding the SEC settlement appears to have faded. XRP’s NUPL chart denial phase suggests investor conviction falters as short-term holders weigh risks.

Traders are now eyeing the $2.20 support zone, with a breakdown likely triggering further losses. If buyers fail to step in soon, XRP could revisit levels not seen since its pre-breakout consolidation.

Judge Torres’ decision to reject the joint Ripple-SEC motion has injected fresh uncertainty into XRP’s legal roadmap. Ripple insists that XRP is not a security.

However, the paused settlement introduces procedural challenges requiring resolution before finalizing the case.

Disclaimer

This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.