- Court dismisses four class action claims against Ripple CEO.
- Ripple-SEC case proceeds to trial, focusing on CEO’s statements.
- Judge challenges prior ruling on XRP’s non-security status.
In a surprising turn in the protracted Ripple-SEC legal battle, Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California dismissed four class action claims against CEO Brad Garlinghouse.
However, the judge partially denied the defendant’s motion for summary judgment, deciding to move the case to trial in California.
On Thursday, the judge dismissed the Ripple CEO from his four “failure to register” charges. The judge ruled in favor of Garlinghouse’s potential trial for allegedly violating securities laws by making “misleading statements” during a 2017 interview. According to the plaintiff’s arguments, Garlinghouse touted XRP as “very, very long” while selling “millions of XRP on various crypto exchanges” throughout the year.
Ripple’s regulatory challenges began in 2020 when the Securities and Exchange Commission (SEC) filed a lawsuit against the exchange and its key executives. The lawsuit alleged that they raised “over $1.3 billion through an unregistered, ongoing digital asset securities offering.” Subsequently, the lawsuit saw several developments, including the platform’s landmark victory against the regulators with Judge Analisa Torres’ ruling that XRP was not a security.
While Ripple’s lawyers urged Judge Hamilton to “follow the reasoning” of Judge Torres, the former disagreed with the latter’s ruling. Judge Hamilton stated:
“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. 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.”
In response to the recent development in the lawsuit, Ripple’s Chief Legal Officer Stuart Alderoty expressed his pleasure with the dismissal of the four claims against the CEO. Reiterating that Judge Torres’ ruling still “stands,” he stated, “Nothing here disturbs that decision.”
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