XRP Lawsuit Update: Ripple CEO Brad Garlinghouse Accused of Misleading Statements in 2017

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The United States Federal Court Judge Phillis Hamilton’s order has given the go-ahead to a civil securities lawsuit against Ripple Labs alleging its CEO of breaking California Security Laws. A jury will now decide if Ripple’s CEO Brad Garlinghouse had made misleading statements in a 2017 interview. Ripple is now accused of four allegations of failing to register XRP as a security. 

In a 2017 interview on Canada’s BNN Bloomberg, Garlinghouse had said that he was ‘very very long’ on XRP, but the suit alleges that it was false because he had sold millions of XRP throughout the year. 

Garlinghouse’s ‘Misleading Statement’ And XRP’s Security Status!

Hamilton had noted that Ripple argued the ‘misleading statement’ claim to be thrown out, as XRP is not a security under the Howey Test citing a landmark ruling in July 2023 by Judge Analisa Torres in the SEC and Ripple lawsuit. However, Hamilton disagreed with this and found that XRP could be a security when sold to non-institutional investors.

Hamilton has noted that “The 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 Ripple’s efforts to facilitate XRP’s use in cross-border payments, among other things.”

The Torres ruling was a huge win in 2023 as many in the crypto industry had lauded the ruling but it is not showing as big an impact as was hoped from it. 

SEC Turns Down Ripple’s Lowered Civil Penalty 

Also, the SEC and Ripple are in a clash over the size of the civil penalty, where initially the SEC had proposed $1.95 billion in recovery and civil penalties, while Ripple strongly opposed it and came up with a $10 million figure instead of $876 million citing the recent settlement of the regulator with the bankrupt Terraform Labs. However, the agency denied the lowered amount claiming that it would not satisfy the purposes of the civil penalty statutes. 

Read Also: Will Ripple Settle? Court Decision Triggers Speculation in XRP Lawsuit