Ripple CEO Brad Garlinghouse is facing a new lawsuit centered around comments he made in 2017, which plaintiffs claim were misleading.
In a 2017 interview with Canada’s BNN Bloomberg, Garlinghouse stated he was “very, very long” on Ripple’s XRP. However, the lawsuit alleges that he subsequently sold millions of XRP on various cryptocurrency exchanges, contradicting his earlier statements.
On June 20, Judge Phyllis Hamilton dismissed four allegations that Ripple failed to register XRP as a security. However, she allowed the lawsuit to proceed regarding Garlinghouse’s allegedly misleading comments.
The roots of this legal battle trace back to a 2020 lawsuit where the SEC accused Ripple of conducting an unregistered securities offering worth $1.3 billion by selling XRP, holding Garlinghouse and Ripple co-founder Chris Larsen accountable. In a significant ruling last July, a judge in the Southern District of New York determined that XRP is “not necessarily a security.”
Judge Hamilton’s recent decision diverged slightly, suggesting that XRP sold to “programmatic” traders—non-institutional buyers—should be regarded as a security. She noted that the court cannot conclude that a reasonable investor would not have expected profits due to Ripple’s efforts in facilitating XRP’s use in cross-border payments.
Ripple’s chief legal officer, Stu Alderoty, responded to the court’s decision by expressing satisfaction that all class action claims were dismissed, emphasizing that the surviving individual state law claim will be addressed at trial. He also noted that the ruling from Judge Torres in the SEC case remains unchanged.
This lawsuit highlights the ongoing legal complexities surrounding Ripple and its executives, with significant implications for the cryptocurrency market.
