The U.S. District Court for the Northern District of California has issued an order granting in part and denying in part the motion for summary judgment in a lawsuit concerning allegations of securities law violations against Ripple Labs, XRP II, and Ripple CEO Brad Garlinghouse.
Ripple Wins Partial Summary Judgment in Securities Lawsuit
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Court Ruling on Ripple’s Securities Lawsuit
The U.S. District Court for the Northern District of California issued an order on Thursday regarding the summary judgment motions in the litigation against Ripple Labs and its affiliates. U.S. District Judge Phyllis J. Hamilton’s decision addresses multiple claims involving securities law violations, “granting in part and denying in part” the motion for summary judgment. The court document states:
Defendants are granted summary judgment on the federal and state class claims. Defendants are denied summary judgment on plaintiff Sostack’s individual claim under California law.
“This is a securities case,” the court document describes. This case concerns allegations of securities violations against Ripple Labs, XRP II (a subsidiary of Ripple), and Ripple CEO Brad Garlinghouse. Plaintiff Bradley Sostack asserts that Ripple failed to register XRP as a security under federal and state laws and that Ripple and Garlinghouse made misleading statements about XRP.
The court granted summary judgment in favor of Ripple on several claims. Specifically, the court found that the federal securities claims were barred by the statute of repose, which prohibits claims brought more than three years after the security was first offered to the public. Additionally, the court ruled that the state securities claims failed because the plaintiff could not establish privity between the XRP purchasers and Ripple or its agents, as required under California law.
However, the court denied summary judgment on the individual plaintiff Bradley Sostack’s claim that Ripple’s CEO made misleading statements about his holdings of XRP. This claim centers on a statement made by Garlinghouse during a December 2017 interview, where he expressed a strong personal investment in XRP. “I’m very, very long XRP as a percentage of my personal balance sheet,” he said. However, the plaintiff alleged that the statement was false because “throughout 2017 Garlinghouse sold millions of XRP on various cryptocurrency exchanges,” the court document describes.
The court found that there was enough evidence for a reasonable jury to decide whether XRP purchasers could have expected profits based on Ripple’s efforts, rather than just market trends. Therefore, this claim will proceed to trial. The court document further states: “Overall, given the relative novelty of cryptocurrency, and given the lack of any controlling law regarding the motivation of a reasonable cryptocurrency investor, 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.”
What are your thoughts on this ruling in the Ripple securities lawsuit? Share your opinions in the comments section below.
