The defender was forced to front the Football Federation Australia (FFA) body after being referred by the Match Review Panel over an incident in the 71st minute of last Saturday's pulsating 3-3 draw with Melbourne Victory.
Ryall was facing a two-match ban after appearing to go to ground with minimal contact in a clash with Victory's Gui Finkler, which led referee Strebre Delovski to award a penalty - converted by Shane Smeltz - that saw Sydney pull level at 2-2.
Early in the two-hour hearing, however, lawyers for the club produced previously unseen video evidence that clearly showed there was contact between the defender's foot and that of Finkler.
The issue then became whether or not Ryall knew the contact was insufficient to warrant a penalty and yet appealed to the referee to try to earn one.
The Disciplinary Committee, comprising John Marshall SC, former Socceroos player Dominic Longo and Peter Mulligan, decided that was not the case, with Marshall saying there wasn't enough evidence to substantiate the claim: "Having watched the video carefully we were able to see what a lot of others didn't – that there was contact.
"Regarding the circumstances under why the player went to ground and the issue of asking the referee to rule on the situation, we believe there was not an intent to deceive and we're not satisfied the player did intend to deceive."
While Ryall refused to speak with the media afterwards, a relieved Sydney FC CEO, Tony Pignata, claimed that justice had been served.
"We are satisfied that the committee has reached the correct decision, having been presented with overwhelming proof that there was contact between Sebastian and the Melbourne Victory player," said Pignata.
"Sebastian is not a diver and I'm pleased his character is intact over this."
However, both the disciplinary committee and the club said they were concerned by Ryall's subsequent actions where he flicked Finkler's hair after the penalty had been awarded.
The committee's head, John Marshall, said it took a "dim view" of such behaviour and Pignata announced the club had also had "stern words" with Ryall.
"While we have fully supported Sebastian over the allegation he committed an act of simulation and have been vindicated in that support, we were disappointed with his response to the award of the penalty," Pignata said.
"Seb has been reminded of his on-field responsibilities and that respect for our team and the opposition is a big part of our values here at Sydney FC."
The Sydney boss, though, also had some strong words for some of Victory's players who questioned the initial incident: "We are disappointed with some of the responses to this incident, particularly from players at other clubs who should perhaps look within their own club before commenting on our club or players."
Ryall will now be free to line up for the Sky Blues when they host Central Coast on Saturday night, although he will face competition for a starting spot with the return from suspension of both Jacques Faty and Nikola Petkovic.
