Ripple is set for new legal battles after a US judge in California approved a lawsuit against the crypto company over alleged misleading statements by its CEO, Brad Garlinghouse.
This means the case would go to trial and a jury would decide whether the Ripple boss misled investors into investing in the digital asset through a 2017 television interview with the Business News Network, where he said:
“I am long XRP, I am very long XRP as a percentage of my personal balance. . . . . [I am] not long on any of the others [digital] assets, because it is not clear to me what their real use is, what problem they really solve. . . if you solve a real problem, if it’s a large-scale problem, then I think you have a huge opportunity to grow that further. Obviously we’ve been very lucky, I’ll be staying XRP for a very, very, very long time, there’s an expression in the industry HODL, instead of holding, it’s HODL… I’m on the HODL side.
Ripple attempted to dismiss the “misleading statement” claim by stating that XRP was not a security. However, Judge Phyllis Hamilton noted that while XRP may not be classified as a security, it can still be considered one when sold to non-institutional investors.
The judge emphasized that investors’ profit expectations could make XRP a certainty, in line with one of the parameters of the Howey Test. She further noted that Ripple’s actions, such as its efforts to promote the use of XRP in cross-border payments and other applications, could lead investors to expect profits from XRP.
As a result, Judge Hamilton stated:
“Accordingly, the [Court] I cannot legally conclude that Ripple’s conduct would not have led a reasonable investor to expect a profit from the efforts of others.”
Ripple has not yet responded Crypto Slates request for comment as of press time.
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Liam ‘Akiba’ Wright
Liam, also known as ‘Akiba’, is a reporter, editor and podcast producer at CryptoSlate. He believes decentralized technology has the potential to bring about widespread positive change.