- Judge Hamilton has given the green light to a lawsuit because he considers XRP a potential security to be sold to private investors.
- The legal complexities persist despite rejected claims.
In the middle of Ripple [XRP] Labs’ legal dispute with the SEC over XRP’s security classification, another important court ruling has emerged.
Is XRP a security?
On June 20, Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California ruled that XRP could be considered a security if sold to retail investors and allowed a lawsuit following statements made by Ripple CEO Brad Garlinghouse.
Notably, there were four other charges accusing Ripple of failing to register XRP as a security asset, but Judge Hamilton dismissed them.
Therefore, the case at trial will focus specifically on whether Garlinghouse’s statements constituted misleading information.
Expressing his content, Ripple Chief Legal Officer Stu Alderoty told a publication:
“We are pleased that the California court has dismissed all class action claims. The only individual constitutional claim that survived will be heard at trial.”
Additionally, before issuing her final judgment to proceed with the trial, Judge Phyllis Hamilton denied Ripple Labs’ request for summary judgment, a legal motion seeking a court ruling in its favor without a complete process.
IInstead, she greenlighted the civil securities lawsuit against Ripple Labs.
What happened in 2017?
For context, Ripple CEO Brad Garlinghouse’s statement in 2017 in conversations with Canada’s BNN Bloomberg was:
“I’m long XRP, I’m very, very long XRP as a percentage of my personal balance.”
However, the lawsuit claims this was untrue and claims he sold millions of XRP during that period.
It should be noted that an earlier ruling by Judge Analisa Torres concluded that XRP is a security under the Howey test, especially when sold to institutional investors.
However, Hamilton stated that a rational, non-institutional investor will also expect to make a profit from Ripple’s efforts in purchasing XRP, and thus it meets the Howey test criteria to be considered a security.
So the lawsuit in which Brad Garlinghouse alleged that he made misleading statements about the status of XRP can proceed.
Ergo, the different legal interpretations underline the complex legal landscape for cryptocurrencies. Despite the initial optimism following Torres’ ruling, the unpredictable nature of regulatory decisions in this evolving field remains evident.
Price action of XRP
Amid ongoing legal disputes involving Ripple, XRP is trading at $0.4912, having fallen 1.74% in the past 24 hours.
AMBCrypto’s analysis of Santiment data further suggests a sharp increase in social volume, which had recently fallen dramatically at press time.
However, social dominance went up, indicating possible positive developments for XRP in the coming days.
Source: Santiment