Legal Battle Continues for Ripple Labs
A federal court judge in the United States has recently allowed a civil securities lawsuit against Ripple Labs to proceed, denying the company’s request for summary judgment. The lawsuit accuses Ripple CEO Brad Garlinghouse of violating California securities laws. California District Court Judge Phyllis Hamilton’s ruling means that a jury will determine whether Garlinghouse made false statements in a 2017 interview. While the judge dismissed four claims related to XRP registration, one allegation regarding Garlinghouse’s alleged misleading statements remains.
Garlinghouse’s Alleged Deceptive Actions
- In a 2017 interview on Canada’s BNN Bloomberg, Garlinghouse claimed to be very bullish on XRP.
- However, the lawsuit alleges that this statement was false since he reportedly sold millions of XRP tokens that year.
Ripple’s Legal Response
- Ripple’s Chief Legal Officer, Stu Alderoty, expressed satisfaction with the court’s decision, noting that all class action claims were dismissed except for the individual state law claim.
- Judge Hamilton disagreed with Ripple’s argument that XRP does not qualify as a security under the Howey test, stating that non-institutional investors might perceive XRP as a security.
Ripple’s Legal Victory Against SEC
Last year, a US court ruled in favor of Ripple in a lawsuit brought by the SEC, determining that selling XRP on exchanges does not constitute an investment contract. However, the court also found that XRP could be considered a security when sold to institutional investors, meeting the conditions outlined in the Howey Test. Despite legal victories, Ripple remains embroiled in ongoing legal battles surrounding XRP’s classification.
Impact on the Crypto Industry
- Initial celebrations within the crypto industry over legal victories have been tempered by subsequent legal challenges and differing judicial perspectives.
- While some rulings have favored Ripple, others have raised questions about XRP’s regulatory status and potential consequences for the broader crypto market.
Hot Take: Ripple’s Legal Challenges Continue
As Ripple faces ongoing legal battles regarding XRP’s classification as a security, the crypto industry remains divided over the implications of these legal disputes. While recent rulings have provided some clarity, the ultimate outcome of these cases could have far-reaching consequences for Ripple and the broader crypto market.
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