when

ZachXBT

A United States federal court judge has greenlit a civil securities lawsuit against Ripple Labs, denying its summary judgment bid in a suit alleging its CEO broke California securities laws.
The June 20 <a href="https://www.courtlistener.com/docket/8150354/419/in-re-ripple-labs-inc-litigation/" target="_blank" rel="noopener nofollow">order</a>&nbsp;by Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California&nbsp;means a jury will decide if Ripple boss Brad Garlinghouse made “misleading statements” in a 2017 <a href="https://www.bnnbloomberg.ca/video/cryptocurrencies-xrp-ethereum-and-litecoin-soar-to-record-highs-after-bitcoin-s-rise~1284604" target="_blank" rel="noopener nofollow">interview</a>. The order has thrown out four allegations around Ripple’s “failure to register XRP as a security.”
In the 2017 interview on Canada’s BNN Bloomberg, Garlinghouse said he was “very, very long” on XRP (<a href="https://cointelegraph.com/xrp-price-index">XRP</a>) — but the suit alleges that was false as he “sold millions of XRP” throughout that year.
<figure data-ct-non-breakable="true">
 <img src="https://s3.cointelegraph.com/uploads/2024-06/5fdd6d40-0f48-4dcd-9e2b-18b7e43a3e67.png" alt="" title="">
 <figcaption style="text-align: center;">
 Transcript of Garlinghouse’s alleged misleading 2017 statement. Source: CourtListener
 </figcaption>
</figure>
“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,” Ripple’s chief legal officer, Stu Alderoty, said in an emailed statement to Cointelegraph.
In her order, Hamilton noted Ripple had argued the “misleading statement” claim should be thrown out, as XRP is not a security under the <a href="https://cointelegraph.com/news/what-are-the-howey-test-and-its-implications-for-cryptocurrency">Howey test</a> — citing a landmark <a href="https://cointelegraph.com/news/ripple-wins-case-against-sec-as-judge-rules-xrp-is-not-a-security"></a><a href="https://cointelegraph.com/news/ripple-wins-case-against-sec-as-judge-rules-xrp-is-not-a-security">ruling in July 2023</a> by Judge Analisa Torres in the <a href="https://cointelegraph.com/learn/the-sec-vs-ripple-lawsuit-everything-you-need-to-know">lawsuit between the U.S. Securities and Exchange Commission</a>&nbsp;and Ripple.
However, Hamilton disagreed and instead found XRP could be a security when sold to non-institutional investors. She said they would have expected profits from Ripple’s efforts, which is one of the markers used in the Howey test.
<blockquote data-ct-non-breakable="true">
 “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.” 
</blockquote>
“Accordingly, the [court] cannot find as a matter of law that Ripple’s conduct would not have led a reasonable investor to have an expectation of profit due to the efforts of others,” Hamilton wrote.
Ripple’s Alderoty said, “The ruling from Judge Torres in the SEC case still stands and nothing here disturbs that decision.”
Related: <a href="https://cointelegraph.com/news/sec-rebuffs-ripple-lower-penalty-argument">SEC shoots down Ripple’s argument for a lower penalty</a>
Many in the U.S. crypto industry hailed Torres’ ruling as <a href="https://cointelegraph.com/news/xrp-holders-celebrate-ripple-win-victory-sec-case">a huge win</a> for the space in 2023, believing other judges would use it as precedent when weighing other crypto cases.
But it isn’t having as big of an impact as hoped.
In the SEC’s case against Terraform Labs, presiding Judge Jed Rakoff — from the same courthouse as Torres — <a href="https://cointelegraph.com/news/judge-denies-motion-dismiss-terraform-sec-case-reject-ripple-ruling">disagreed with the Ripple ruling</a> in rejecting Terraform’s dismissal motion in August.
Terraform went on to lose that case, having to pay a<a href="https://cointelegraph.com/news/judge-approves-4-5b-terraform-sec-settlement"> $4.5 billion settlement</a> to the SEC.
Hall of Flame: <a href="https://cointelegraph.com/magazine/crypto-banters-ran-neuner-says-xrp-is-despicable-tips-hat-to-zachxbt-hall-of-flame/">Crypto Banter’s Ran Neuner says Ripple is ‘despicable,’ tips hat to ZachXBT</a>
Update (June 21, 3:50 am UTC): This article has been updated to add comments from Ripple’s Stu Alderoty.

Ripple faces securities suit in California over CEO’s ‘misleading statement’

Cointelegraph

Other articles published on Jun 21, 2024

Separating Diamond Cuts from Rough Stones - MoonBag Crypto Shines While ChainGPT and LINK Falter

Dogecoin Dominates Meme Coin Market

BDAG’s Presale Escalates as Bitcoin Cash and Avalanche’s Market Value Increase

Best Presale in 2024: Crypto Experts Predicts MoonBag to Soar 100x—Investors Abandon Ship for Moo...

Crypto: The Next Generation Memecoin Borpa is Coming to Stakeland!

BlockDAG’s $2M Giveaway Extravaganza Countdown In 60 Days! Insights On Solana ETF News & XRP Mark...

Join our free newsletter for daily crypto updates!