In a remarkable development in the legal case between #SECCryptoAccounting and Ripple, the US Federal Court allowed the civil lawsuit related to allegations of violation of securities laws to continue.
This comes after Judge Phyllis Hamilton of the California District Court rejected Ripple's request for summary judgment.
Misleading statements about the status of XRP:
The case revolves around accusations that Ripple's CEO, Brad Garlinghouse, made misleading statements about XRP's status as a digital asset in a television interview in 2017, while questioning the benefits of other digital assets.
According to court documents, these statements were posted on Ripple's official Twitter account, increasing their reach and influence.
The plaintiff in the case noted that Garlinghouse's statements were misleading, as the CEO continued to sell millions of XRP coins on multiple cryptocurrency exchanges during 2017, despite his public statements that he held large amounts of XRP.
Judge Hamilton rejected Ripple's arguments that Garlinghouse's statements did not constitute a violation because #XRPGoal did not meet security standards under the Howey test.
However, Judge Hamilton took a different stance in her recent ruling, stating that XRP can be considered a security when it is sold to retail investors rather than institutional investors.
It explained in its decision that individual investors expected to profit from Ripple's efforts to promote the use of XRP in cross-border financial transactions, which satisfies one of the key factors in the Howey test for determining whether an asset is considered a security.
Judge Hamilton stated:
Given the relative newness of cryptocurrencies and the absence of a clear regulatory framework regarding the motivations of reasonable investors in this area, the court declines to rule that the investor would have relied on general trends in the cryptocurrency market to make profits but instead relied on efforts made by Ripple to facilitate the use of XRP in payments. Across borders
Ripple continues to face legal challenges and defend against legal allegations related to #XRP_ETF .
As judicial rulings continue, the legal status of XRP remains the focus of attention of many in the field of cryptocurrencies, especially with regard to its classification as securities and the impact this will have on its future use and trading.