⚡ Ripple Faces New Legal Challenge
posted 21 Jun 2024
A U.S. court has permitted a new lawsuit against Ripple Labs and its CEO, Brad Garlinghouse, for alleged violations of securities law. The plaintiffs in the case accuse Garlinghouse of making misleading statements during a 2017 interview, which they argue qualifies the XRP token as a security.
At that time, Garlinghouse claimed he had long been trading XRP, but the prosecution contends he was actively selling off the tokens. The case is now set to be decided by a jury. However, Judge Phyllis Hamilton has dismissed four other charges related to the company's failure to register the asset as a security.
We are pleased that the California court dismissed all class action claims. The one individual state law claim that survived will be dealt with at trial,commented Ripple’s Chief Legal Officer Stu Alderoty.
The defense referred to a 2023 decision by Judge Analisa Torres, who explicitly stated that the XRP token does not constitute a security when sold to non-institutional investors. Nevertheless, Judge Hamilton disagreed with this view, pointing out that the clients seemingly expected returns from their investment.
Previously, the cryptocurrency community viewed Torres's decision as almost a complete triumph over regulatory authorities and dishonest investors, potentially setting a precedent that could automatically dismiss similar lawsuits. However, it appears this strategy has not worked as Ripple and its supporters anticipated.
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