- Ripple faces a new securities case in the Californian district court according to reports.
- The company recently concluded its four-year long battle against the SEC.
Ripple Labs, a subsidiary of Ripple, witnesses a securities case filed against the company in California. The new lawsuit targets Ripple CEO, Brad Garlinghouse alleging him of ‘misleading statements’ in a 2017 interview regarding XRP’s designation as a security. The cryptocurrency firm recently celebrated a partial win against the SEC after contesting the case since 2020.
The recent lawsuit was filed in the Californian District Court stating that Garlinghouse violated their Securities laws. Judge Phyllis Hamilton has passed the motion for a jury to investigate his statements, in connection to whether regulators should view XRP as a security.
Moreover, XRP could be considered a security if sold to non-institutional investors, stated the Californian Judge. The CEO in an interview with the Business News Network on December 14 2017, discussed XRP’s extensive use cases. His statement – “I’m long XRP, I’m very, very long XRP as a percentage of my personal balance sheet” was found to be problematic and suggestive of XRP investors expecting profits.
Referring to the CEO’s 2017 statement Judge Phyllis Hamilton wrote:
“Accordingly, the [court] cannot find as a matter of law that Ripple’s conduct would not have led a reasonable investor to have an expectation of profit due to the efforts of others”.
The Californian Jury has filed the case on Ripple’s five different actions, summarised under the institution’s ‘failure to register XRP as a security” under federal law.
How is Ripple Defending the Case?
The Ripple’s major defense relies on the Howey Test conducted in July 2023. The Howey test, a legal framework that verifies financial transactions, ruled XRP as not a security. Additionally, they have also stated that the Howey Test ruling negates the claims that the CEO’s statements are misleading.
Moreover, Ripple also quoted the July 2023 Judge’s ruling as a defense during the lawsuit. According to the company’s chief legal officer, the Californian court has dropped all the claims except one. During the trial Ripple will deal with this claim, stated the legal officer.
Notably, Ripple’s other spokesperson included a statement that the current case doesn’t alter Judge Torres’s ruling in the SEC case and it remains unaltered.
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