A recent ruling by a California judge saw a dismissal of class-action claims against Ripple regarding the sale of XRP, except for one individual case which will proceed to trial.

Back in 2018, Bradley Sostack, a former XRP investor, filed a lawsuit accusing Ripple of unlawfully selling XRP as an unregistered security and violating advertising laws in California. District Judge Phyllis J. Hamilton dismissed the federal and state class-action claims related to securities laws violation.

However, Sostack also presented an individual case claiming that Ripple CEO Brad Garlinghouse made a misleading statement in connection with the offer or sale of securities under California state law. This statement was made during a December 2017 interview in which Garlinghouse expressed his belief in XRP. Sostack alleges that these statements were false, as Garlinghouse supposedly sold millions of XRP on crypto exchanges that year.

Judge Hamilton pointed out that Sostack’s individual claim centers around the Howey test, a legal standard used to determine if a transaction qualifies as an investment contract. She emphasized that due to the novelty of cryptocurrency and the lack of controlling law on the motivations of cryptocurrency investors, it cannot be definitively stated if a reasonable investor would expect profits solely from Ripple’s efforts.

The classification of XRP has been a subject of debate, especially after the U.S. Securities and Exchange Commission (SEC) sued Ripple in 2020 for selling XRP as an unregistered security. A previous ruling by US District Judge Analisa Torres stated that Ripple’s open-market sales of XRP were not security offerings, but sales directly to institutional buyers were.

Garlinghouse viewed Hamilton’s ruling as a victory for Ripple, emphasizing that the dismissal of federal securities law allegations was significant. He also criticized the attempt to distort statements and manipulate the legal system for financial gain.

In conclusion, Garlinghouse stands by his statements and looks forward to addressing any misleading claims during the upcoming trial.