Ripple Faces Securities Suit in California

Source Livebitcoinnews
Jun 22, 2024 19:21

Ripple CEO Brad Garlinghouse’s statements from a 2017 interview have incited a securities investigation in California. California District Judge Phyllis Hamilton has stated that XRP, Ripple’s native token, is a security when offered to retail investors. According to her, Ripple created an expectation of profits for retail investors, which is a component in the Howey Test used to determine if investments are securities.

“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,” she said.

While Ripple successfully won a case brought by the SEC for the same reasons in 2023, Judge Hamilton feels that XRP functions as a security. Ripple had requested to have this case thrown out because of the much-anticipated decision offered by Judge Analisa Torres in the Securities and Exchange Commission v. Ripple Labs, Inc. case. Judge Hamiton has denied that.

The statements that started the securities woes for Ripple came from a 2017 BNN Bloomberg interview from Canada, where Garlinghouse said, “I’m long [on] XRP. I’m very, very long [on] XRP as a percentage of my personal balance sheet.” This suit alleges that the statement was false and uttered to lure in investors because Garlington sold millions of XRP tokens that year.

The case will move forward in the Northern District of California according to Judge Hamilton’s order issued on 20 June. A jury will decide if the statements made by Garlinghouse in his 2017 interview misled investors. The order also threw out four other charges against Ripple for its ‘failure to register XRP as a security.’ A final charge remains.

Image by Miloslav Hamřík from Pixabay

The post Ripple Faces Securities Suit in California appeared first on Live Bitcoin News.

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