XRP Lawsuit Development Ripple CEO Brad Garlinghouse Faces Allegations of Providing Misleading Information in 2017

Judge Phillis Hamilton of the United States Federal Court has approved a civil securities lawsuit against Ripple Labs, accusing its CEO of violating California Security Laws. The lawsuit alleges that Ripple’s CEO, Brad Garlinghouse, made misleading statements in a 2017 interview, and now a jury will determine the validity of these claims. Ripple is facing four allegations of failing to register XRP as a security.

During a 2017 interview on Canada’s BNN Bloomberg, Garlinghouse claimed to be ‘very very long’ on XRP. However, the lawsuit alleges that this statement was false as he had sold millions of XRP throughout the year.

Judge Hamilton rejected Ripple’s argument to dismiss the ‘misleading statement’ claim, stating that XRP could be considered a security when sold to non-institutional investors, despite Ripple’s defense citing a previous ruling by Judge Analisa Torres in the SEC and Ripple lawsuit.

Hamilton emphasized that a reasonable investor may have expected profit from Ripple’s efforts to facilitate XRP’s use in cross-border payments, rather than general cryptocurrency market trends.

While the Torres ruling in 2023 was celebrated in the crypto industry, its impact has not been as significant as anticipated.

Additionally, the SEC and Ripple are at odds over the size of the civil penalty, with the SEC initially proposing $1.95 billion in recovery and civil penalties. Ripple countered with a $10 million figure, citing a recent settlement by the regulator with Terraform Labs. However, the SEC rejected this lower amount, stating that it would not meet the objectives of the civil penalty statutes.

Tags: Ripple (XRP)