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- Ripple faces a fresh civil securities lawsuit after Judge Phyllis Hamilton announced her approval and dismissed four allegations around the failure to register XRP as a security.
- According to the allegation, Ripple’s boss Brad Garlinghouse made a statement in 2017 that allegedly misled people to invest in XRP.
The conclusion of Ripple’s (XRP) legal showdown hangs in the balance as Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California approves a fresh civil securities lawsuit against the blockchain company regarding an alleged misleading statement by CEO Brad Garlinghouse.
The June 20 order implies that a jury would decide if a 2017 statement made by Garlinghouse misled investors into investing in XRP or not.
In investigating the exact comments made in the seven-year-old interview with Business News Network, CNF uncovered an excerpt of the transcript which reads:
I’m long XRP, I’m very, very long XRP as a percentage of my personal balance sheet. . . . . [I am] not long on some of the other [digital]assets, because it is not clear to me what’s the real utility, what problem are they really solving . . . if you’re solving a real problem, if it’s a scaled problem, then I think you have a huge opportunity to continue to grow that. We have been really fortunate obviously, I remain very, very, very long XRP, there is an expression in the industry HODL, instead of hold, it’s HODL… I’m on the HODL side.
How Ripple Attempted to Defend the Fresh Allegation
To dismiss this “misleading statement”, Ripple argued that XRP is not a security under the Howey test, henceforth, the claim should be thrown out. The Ripple lawyers also cited the historic ruling by Judge Analisa Torres in July 2023 in the case between the blockchain company and the SEC to back their argument.
However, Hamilton objected, claiming that XRP could be a security when sold to non-institutional investors. According to her, the effort by Ripple to promote the asset using its “XRP in cross-border payments” and other use cases could certainly cause investors to expect profit.
Hamilton declared:
The court declines to find as a matter of law that a reasonable investor would have derived any expectation of profit from general cryptocurrency market trends, as opposed to Ripple’s efforts to facilitate XRP’s use in cross-border payments, among other things. Accordingly, the [court]cannot find as a matter of law that Ripple’s conduct would not have led a reasonable investor to expect profit due to the efforts of others.
Before that, the order had thrown out four allegations around the failure of Ripple to register XRP as a security as reported by Crypto News Flash. In response to this, Ripple’s chief legal officer, Stu Alderoty, has expressed his satisfaction with the decision by the court to dismiss all class action claims. According to him, the one state law claim that is going to trial would be adequately handled.
The plaintiff — who didn’t buy directly from Ripple and can’t say if he even heard the statement before he traded — allegedly lost a couple hundred $. We look forward to that cross-examination.
At press time, XRP was trading at $0.48 after declining by 1% in the last 24 hours, and 7% in the last seven days.
