Ripple Labs is facing a significant legal challenge as a United States federal court has greenlit a civil securities lawsuit against the company. The lawsuit, focusing on CEO Brad Garlinghouse's statements, alleges that he violated California securities laws. Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California denied Ripple's bid for summary judgment, allowing the case to proceed to a jury trial.
The controversy stems from a 2017 interview in which Garlinghouse claimed to be "very, very long" on XRP. However, it was later revealed that he sold millions of XRP during that period. The lawsuit asserts that these statements were misleading to investors.
Ripple's defense hinged on the argument that XRP is not a security under the Howey test, citing a previous ruling by Judge Analisa Torres in their favor. However, Judge Hamilton found that XRP could be considered a security when sold to non-institutional investors, who might expect profits from Ripple’s efforts.
Ripple’s Chief Legal Officer, Stu Alderoty, expressed satisfaction with the dismissal of class action claims but acknowledged that the individual state law claim would proceed to trial. The case underscores the ongoing legal complexities surrounding cryptocurrency regulations and the interpretation of securities laws.
Disclaimer: Please note that the information provided in this article is based on the referenced research articles. It is essential to conduct further research and analysis before making any investment decisions. The cryptocurrency market is highly volatile, and investors should exercise caution and consult with financial professionals before engaging in cryptocurrency trading or investment activities.
