Ripple Labs executives are now openly criticizing the SEC on Twitter, and claim that Gary Gensler will be the reason why Joe Biden loses the election.
The legal headaches at Ripple Labs just keep on coming.
A judge has now concluded that part of a civil securities lawsuit in California will go ahead, and it all centers on four words said by Brad Garlinghouse, the companyâs CEO.
During a TV interview seven years ago, the entrepreneur had declared he was âvery, very long XRPâ â a seemingly innocuous and unsurprising statement.
But an aggrieved investor is arguing this was misleading, considering that Garlinghouse had sold XRP worth millions of dollars in that same year.
There was a little bit of good news for Ripple Labs though, as Judge Phyllis Jamilton ruled that four other claims in the lawsuit wonât proceed to trial.
Garlinghouse railed against how the ruling had been written about in crypto media â pointing to what he described as âmisleading headlinesâ about the case. He went on to add:
âTo be absolutely clear, this is a big win â all class action claims in the suit were DISMISSED, and absolutely nothing in the decision negates or changes the fact that XRP is, in and of itself, not a security.â
Brad Garlinghouse
Letâs zoom out a little bit here to get the context. In a significant judgment last year, a court in New York had concluded that XRP was ânot in and of itselfâ a security, and no securities laws were broken when the altcoin was sold on crypto exchanges.
However, there was a slight victory for the U.S. Securities and Exchange Commission too, as the judge in that case had agreed that securities law was violated when XRP was sold directly to sophisticated investors. The SEC is now seeking close to $2 billion in penalties.
Thatâs where things get complicated in this latest case. Judge Hamilton believes that XRP has the potential to become a security even when sold to non-institutional investors because there would have been an expectation of profits, a key factor in the Howey test. She said:
âââââThe court declines to find as a matter of law that a reasonable investor would have derived any expectation of profit from general cryptocurrency market trends, as opposed to Rippleâs efforts to facilitate XRPâs use in cross-border payments, among other things.â
Judge Hamilton
Garlinghouse is now throwing cold water over the âmisleading statementsâ part of the civil trial that will go ahead:
âThe sole plaintiff didnât buy XRP directly from Ripple and canât say if he even heard the statement before he traded and only owned a couple hundred XRP. This was a clear example of the trolls that unsuccessfully tried to take advantage of the US legal system and distort statements to seek 100âs of millions in class action settlements.â
Brad Garlinghouse
He went on to argue that he stands by what he said in that CNBC interview, and is now eagerly awaiting the opportunity to talk about this in court.
Rippleâs chief legal officer Stuart Alderoty went on to echo these remarks, saying: âWe look forward to that cross-examination.â
You might also like: Kraken v CertiK: Whoâs right?
Ripple slams the SEC
Beyond this court case, both Garlinghouse and Alderoty have put themselves â not to mention Ripple Labs â firmly on the warpath with the SEC.
Absolute nonsense coming from @GaryGensler today. And this slander about âall crypto execs going to jailâ from the man who completely missed FTX (and actually cozied up to SBF), and wasnât even invited to the DOJ announcement about Binance. If he was really âworking for the⊠https://t.co/c3ynB5Gncl
â Brad Garlinghouse (@bgarlinghouse) June 25, 2024
Garlinghouse accused SEC chair Gary Gensler of speaking âabsolute nonsenseâ when he said that leading lights in the crypto sector from a couple of years ago âare either in jail, about to go to jail or awaiting extradition.â
The entrepreneur claimed this amounts to âslanderâ â and was a little rich coming from someone who had failed to clamp down on FTX before it spectacularly tipped into bankruptcy.
Pointing to the growing anger in the crypto industry thatâs been directed at the SEC and the White House, he went on to warn:
âGensler will cause Biden to lose the election.â
Brad Garlinghouse
Meanwhile, Alderoty has been questioning Genslerâs claims that the SEC adjusts whenever court decisions donât go its way, with some judges claiming the regulator has overreached.
Note to @GaryGensler: The courts arenât âadjustingââŠthey are finding that you are breaking the law by exceeding your statutory authority. https://t.co/rne7JRygm2
â Stuart Alderoty (@s_alderoty) June 26, 2024
Ripple Labs clearly isnât going down without a fight â and the company looks set to make a hell of a lot of noise as that all-important election in November nears.
You might also like: Can crypto trust Trump?