Ripple is facing a new civil securities lawsuit following the approval and dismissal of four allegations related to the failure to register XRP as a security by Judge Phyllis Hamilton.
The lawsuit revolves around a statement made by Ripple CEO Brad Garlinghouse in 2017, which allegedly misled people into investing in XRP.
Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California has approved the lawsuit, leaving the outcome of Ripple’s legal battle uncertain. The lawsuit will now be decided by a jury, who will determine whether Garlinghouse’s statement misled investors.
An investigation into the statement made by Garlinghouse in a seven-year-old interview with Business News Network revealed an excerpt from the transcript. In the interview, Garlinghouse expressed his support for XRP and stated that he was personally invested in the cryptocurrency. He also mentioned that he was skeptical about other digital assets and their real-world utility.
Ripple attempted to defend against the allegations by arguing that XRP is not a security under the Howey test. The company also cited a previous ruling by Judge Analisa Torres in July 2023, which supported their argument.
However, Judge Hamilton disagreed with Ripple’s defense, stating that XRP could be considered a security when sold to non-institutional investors. She highlighted Ripple’s efforts to promote XRP’s use in cross-border payments as a factor that could lead investors to expect profit.
The court ruled that it could not conclude as a matter of law that Ripple’s conduct would not have led a reasonable investor to expect profit due to the efforts of others.
Prior to this ruling, four allegations related to Ripple’s failure to register XRP as a security were dismissed by the court. Ripple’s chief legal officer, Stu Alderoty, expressed satisfaction with the court’s decision to dismiss these claims, stating that the remaining state law claim would be adequately addressed.
The plaintiff in the case allegedly lost a small amount of money and did not buy XRP directly from Ripple. Ripple looks forward to cross-examining the plaintiff.
As of now, XRP is trading at $0.48, with a 1% decline in the past 24 hours and a 7% decline in the past seven days.