Ripple lawsuit, Garlinghouse director accused of misleading statements

The latest development in the SEC’s lawsuit against Ripple is that the judge is allowing the misleading statement charges against CEO Brad Garlinghouse to proceed. However, Garlinghouse considers this a major victory as four other charges against him have been dismissed.

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Loss or big win for Ripple?

The judge expressed doubts about an earlier decision by another judge, which stated that XRP is not a security. Hamilton said: “The court does not find that a reasonable investor would expect to gain from general trends in the crypto market, but rather from Ripple’s efforts to promote the use of XRP in cross-border payments, among other things.”

This statement sparked debate within the community, with many “misleading and factually incorrect headlines.” Garlinghouse stated:

“To be absolutely clear, this is a major victory – all class claims in the lawsuit are dismissed, and nothing in the decision changes the fact that XRP itself is not a security (per the New York court decision). The ruling in California dismissed all allegations that Ripple violated federal securities laws by selling XRP.”

The previous day’s ruling accused the Ripple CEO of promoting XRP as a very, very long-term investment while selling millions of XRP on various crypto exchanges throughout the year. Garlinghouse reiterated his position: ‘As regards the ‘misleading statements’, I stand by what I said and I look forward to explaining that at trial.’

What is the original charge?

The lawsuit between the US Securities and Exchange Commission (SEC) and Ripple Labs revolves around the question of whether the XRP token is a security. In other words, a security that the SEC may enforce.

The SEC accused Ripple in December 2020 of selling XRP in an unregistered securities offering. This means that Ripple would have sold XRP without following the SEC’s rules. The SEC claims that XRP is a security because it is an investment contract through which investors expect to make profits through the efforts of Ripple and others.

Ripple denies the SEC’s accusations and claims that XRP is not a security, but a currency just like Bitcoin and Ethereum.

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