Stuart Alderoty, Ripple CLO has broken the silence on a new XRP securities lawsuit causing a stir in the community. The legal veteran claims that the California judge who presided over a controversial Ripple case dismissed all allegations suggesting that the blockchain payment platform violated federal securities law.
Lawsuit Against Ripple CEO Proceed to Trial
On Thursday, Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California approved a new civil lawsuit against Ripple to proceed to trial.
She partly denied the crypto firm’s motion for summary judgment in a suit that accused Brad Garlinghouse Ripple’s CEO of violating state securities laws in 2017. Judge Hamilton aims to find out if Garlinghouse made “misleading statements” that were connected with the sale of securities in a 2017 televised interview.
However, the other four claims in the class action outlined in the securities lawsuit were dismissed by the judge. The tossed out claims includes the so-called “failure to register claims”. To the decision of Judge Hamilton including the one individual state law claim that will proceed to trial, Alderoty noted that it will be dealt with at appropriately.
One state law claim, based on a 2017 statement, is going to trial. The plaintiff — who didn’t buy directly from Ripple and can’t say if he even heard the statement before he traded — allegedly lost a couple hundred $. We look forward to that cross examination. 2/2
— Stuart Alderoty (@s_alderoty) June 21, 2024
The allegations against Garlinghouse states that he violated California’s securities laws by professing to be “very, very long XRP.” At the same time, he was selling “millions of XRP on various cryptocurrency exchanges” throughout 2017.
On the other hand, Ripple’s lawyers do not think that the claim should stand considering that XRP does not meet the definition of a security under the Howey Test. This aligns with Judge Analisa Torres July 13 ruling that XRP did not meet all the criteria of the Howey Test when it was offered for sale directly to retail participants on crypto exchanges.
Fueled by this argument, the plaintiff’s position “cannot give rise to a claim for misleading statements in connection with a security,” Ripple’s lawyers said.
Lawyers Disagree With Judge Torres’s July 17 XRP Ruling
While Torres’ verdict at the time gave Ripple partial victory, it is worth noting that not many of her colleagues shared her stance.
Recall that District Judge Jed Rakoff, outrightly rejected the ruling in another case that was presented by the United States Securities and Exchange Commission (SEC) against Singaporean crypto firm Terraform Labs.
Judge Hamilton wrote “Accordingly, the [court] cannot find as a matter of law that Ripple’s conduct would not have led a reasonable investor to have an expectation of profit due to the efforts of others.”
Alderoty still reiterated that Judge Torres’s ruling still stands undisturbed. He ultimately allayed all fears of wrongdoing, a statement that has now been corroborated by Ripple CEO Brad Garlinghouse.
As many have noticed – and some have already pointed out – there have been numerous misleading and some factually inaccurate headlines describing the decision made by a California judge yesterday in the class action lawsuit about XRP. (I’m happy to see some correcting them – I…
— Brad Garlinghouse (@bgarlinghouse) June 21, 2024
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