As an experienced financial analyst following the cryptocurrency market closely, I find Stuart Alderoty’s recent statements regarding the ongoing legal battle between Ripple and the SEC quite intriguing. The latest development in this complex case involves a California judge allowing a securities lawsuit against Ripple CEO Brad Garlinghouse to proceed to trial over a single state law claim.
As an analyst, I’d rephrase it this way: In a recent development, Ripple‘s Chief Legal Officer (CLO), Stuart Alderoty, has spoken out about a new XRP-related securities lawsuit that has sparked controversy in the community. According to Alderoty, who is known for his legal expertise, the California judge overseeing a previous contentious Ripple case dismissed all allegations suggesting that Ripple, as a blockchain payment platform, had violated federal securities law.
Lawsuit Against Ripple CEO Proceed to Trial
Thursdays saw Judge Phyllis Hamilton from the United States District Court for the Northern District of California give the green light for a fresh civil lawsuit against Ripple to advance to trial.
In a lawsuit alleging securities law violations against Ripple’s CEO Brad Garlinghouse in 2017, Judge Hamilton is investigating whether Garlinghouse made misleading statements during a televised interview that influenced the sale of securities. She partially rejected the crypto firm’s request for summary judgment on this issue.
Despite the four additional allegations in the class action lawsuit being dismissed by Judge Hamilton, she kept one individual state law claim for trial. Regarding the discarded claims, which encompassed “failure to register” issues, Alderoty acknowledged their handling would be addressed accordingly.
In a upcoming court case, one claim concerning a state law will be tested. This claim stems from a 2017 declaration. The plaintiff, who didn’t purchase directly from Ripple and isn’t certain if he was even aware of the statement before trading, is said to have incurred a loss of a few hundred dollars. We are eager to engage in cross examination during the trial.
— Stuart Alderoty (@s_alderoty) June 21, 2024
Garlinghouse is accused of breaking California’s securities regulations by claiming to hold large amounts of XRP while simultaneously selling millions of XRP units on different cryptocurrency platforms during the year 2017.
From a different perspective, Ripple’s legal team argues that the claim lacks merit since XRP does not fit the definition of a security under the Howey Test. This stance is consistent with Judge Analisa Torres’ decision on July 13, stating that XRP did not fulfill all the requirements of the Howey Test when it was sold to individual investors through cryptocurrency exchanges.
Based on this debate, the plaintiff’s stance doesn’t qualify for making false claims regarding securities, according to Ripple’s legal team.
Lawyers Disagree With Judge Torres’s July 17 XRP Ruling
As an analyst, I would rephrase it as follows: Although my initial assessment granted Ripple a partial win based on Torres’ decision, it’s important to mention that not all of my professional peers agreed with this viewpoint at the time.
District Judge Jed Rakoff overruled the SEC’s decision in a separate case regarding cryptocurrency company Terraform Labs.
In accordance with this, the court is unable to determine as a legal fact that Ripple’s actions did not cause a rational investor to anticipate earning profits through the contributions of others.
Alderoty continued to affirm that Judge Torres’s decision remains unchanged. He subsequently put to rest any concerns about misconduct, a point now validated by Ripple CEO Brad Garlinghouse.
I’ve observed that several people have brought attention to – and even corrected – the misleading and inaccurate headlines concerning the California judge’s decision in the recent class action lawsuit regarding XRP. (I appreciate their efforts in setting the record straight.)
— Brad Garlinghouse (@bgarlinghouse) June 21, 2024
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2024-06-21 20:06