Regulation
Ripple Securities Case Goes to Trial
A crucial case against Ripple Labs, involving alleged misleading statements from CEO Brad Garlinghouse, is set to go to trial.
The decision came after U.S. District Court Judge Phyllis Hamilton denied Ripple’s request for summary judgment on June 20. The lawsuit centers on Garlinghouse’s claims in a 2017 interview, in which he said he was “very, very long” on XRP.
XRP still faces challenges in being classified as a security
The plaintiff, Bradley Sostack, dispute that Garlinghouse’s statements were misleading, because he sold millions of XRP in the same year.
“I’m long XRP, I’m very, very long XRP as a percentage of my personal balance sheet. . . . . [I am] not long on some of the others [digital] active, because I don’t know what the real use is, what problem do they actually solve. . . if you’re solving a real problem, if it’s a large-scale problem, then I think you have a huge opportunity to continue to grow it. We’ve been very lucky obviously, I’m very, very, very long a television interview in 2017.
Filed in California District Court, the case raises several serious allegations against Ripple Labs, its subsidiary XRP and CEO Garlinghouse. These include the unregistered offer and sale of securities and misleading statements relating to the sale of securities.
Learn more: Ripple (XRP) Price Prediction 2024/2025/2030
A key question in the lawsuit is whether XRP qualifies as a “security” under U.S. law, a determination that could have a significant impact on the regulatory obligations of digital currencies.
Ripple’s defense primarily argues that XRP does not meet the criteria of security based on the Howey test, a standard for defining investment contracts. However, Judge Hamilton focused her decision on moving the case forward to trial.
“Defendants have made no further argument in favor of summary judgment on plaintiff’s fourth cause of action for misrepresentation in connection with the offer or sale of a security, summary judgment on this cause d The action is dismissed and the claim will proceed to trial. », Mentions the Court document.
Despite the Court’s decision, there has been no significant impact on the price of XRP so far. At the time of writing, it is trading at $0.4901, down around 1.12% in the last 24 hours.
XRP price performance. Source: BeInCrypto
Additionally, this case contrasts with an earlier ruling by Judge Analisa Torres of the Southern District of New York. In this case, Torres found that Ripple’s “programmatic sales” and other XRP distributions were not investment contractsthereby exempting them from certain securities regulations.
Nonetheless, she ruled that Ripple’s institutional sales of $728.9 million in XRP were indeed unregistered investment contractsin violation of section 5 of the Securities Act.
Learn more: Everything you need to know about Ripple vs SEC
The upcoming trial could influence the broader regulatory environment for digital currencies in the United States. It tests the limits of U.S. securities law in the context of the crypto market. Additionally, the trial results could set precedents that could affect how digital assets are traded and regulated across the industry.
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