Lawsuit Filed Against Ripple for "Misleading Statements"

A federal judge in the US has given the green light to a securities lawsuit filed against Ripple Labs.

The decision by a judge in California means that a jury will decide whether Ripple CEO Brad Garlinghouse made "misleading statements" in 2017.

“Sold millions of XRP”

In an interview with BNN Bloomberg in 2017, Ripple CEO Brad Garlinghouse hinted that the price of XRP would rise in the long term. However, according to the lawsuit, Garlinghouse sold "millions of XRP" in the same year.

In his decision, Judge Hamilton stated that Ripple's "misleading statement" claim should be rejected. Ripple had argued that XRP was not a security under the Howey test, and this argument was based on Judge Analisa Torres' landmark decision in July 2023 in the case between the US Securities and Exchange Commission (SEC) and Ripple.

However, Hamilton stated that XRP could be a security when sold to non-institutional investors. He said investors may have expected profits from Ripple's efforts, and this was one of the criteria of the Howey test.

“The court declines to reach a legal conclusion that a reasonable investor would expect to profit from Ripple's efforts to facilitate the use of XRP in cross-border payments rather than general cryptocurrency market trends,” Hamilton said.

"Judge Torres' decision in the SEC case still stands and nothing here overturns that decision," said Alderoty, Ripple's chief legal officer.