1-8-2025 – Former SEC attorney Marc Fagel has clarified that Ripple’s $125 million penalty payment remains held in escrow rather than transferred to the U.S. Treasury, disputing online claims that the XRP lawsuit settlement had been finalized.

Fagel explained on social platform X that while Ripple deposited the court-ordered penalty, the funds are currently held in an escrow account controlled by the company’s legal counsel. The money will only transfer to the Treasury once both parties formally withdraw their appeals from Judge Torres’s May 2023 ruling. “Neither party has dismissed its appeal; they will presumably do so jointly once the SEC votes to approve dismissal,” Fagel wrote, emphasizing that the legal process remains incomplete.

The clarification comes amid broader regulatory shifts under new SEC Chair Paul Atkins, who this week unveiled “Project Crypto” to modernize securities regulations for digital assets. Recent SEC statements suggest a more lenient stance, with officials indicating only a smaller subset of cryptocurrencies may qualify as securities compared to previous enforcement positions.

Despite these potentially favorable regulatory changes, the XRP case remains in legal limbo. While Ripple appears ready to conclude the matter, the final resolution depends entirely on the SEC’s decision to withdraw its pending appeal, a process that could extend for several more weeks.

Market observers will watch for the SEC’s formal vote on dismissing its appeal, which would trigger the escrow release and finally close one of crypto’s most closely watched legal battles.