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Ripple Labs CEO Brad Garlinghouse has taken swipes at news outlets over inaccurate reporting of a court decision involving XRP and the US Securities and Exchange Commission (SEC).
The fiasco began following a ruling by Judge Phyllis Hamilton of the US District Court for the Northern District of California, which threw out a class action suit against the issuers of the XRP token. While considered a massive win for Ripple Labs, the judge allowed an individual state law claim to proceed to trial based on alleged āmisleading statementsā made by Garlinghouse in 2017.
As XRPās community celebrated the dismissal of securities law violation, CoinDesk and a raft of crypto news outlets reported that Hamiltonās decision could imply that XRP may be a security. The reporting triggered a stir in the ecosystem as XRP enthusiasts believe the question of the asset being a security was finalized in a 2023 decision by District Judge Analisa Torres in New Yorkās Southern District.
CoinDesk described the ruling as a āfly in the ointment,ā but the report elicited fierce kickbacks from XRPās community, with Garlinghouse leading the charge. According to Garlinghouse on X (formerly Twitter), Garlinghouse described the report as āembarrassing,ā noting that Hamilton did not expressly term XRP as a security.
He argued that only Bitcoin (BTC) and XRP have attained regulatory clarity over their status as securities, terming it as a known fact. The Ripple CEO pointed out that CoinDeskās erroneous reporting had previously forced the hand of the news outlet to correct a misleading headline and delete a tweet.
Community notes under CoinDeskās tweet attempted to provide context to the report by citing Judge Torresā 2023 decision.
āSpreading this misinformation about the legal status of XRP almost one year after the Torres decision is just dishonest,ā Bill Morgan, a pro-XRP lawyer based in the US.
Legal back and forths on the matter
At the time, Judge Torres ruled that XRP did not qualify as a security in its sales on exchanges or distribution by Ripple to developers and other employees. However, the ruling from 2023 disclosed that the only transactions with the toga of investment contracts are XRP sales to institutional clients.
Despite the uproar from CoinDeskās reporting, some lawyers continue to argue that Torresā ruling is not set in stone and district court disagreements could force the hand of a higher court to look into the matter.
āWeāre going to have a lot of district courts reaching differing conclusions, and even when they reach the same conclusions, they might get there for different reasons,ā said Jason Gottlieb, partner at Morrison Cohen. āUntil all these cases bubble up into the appellate courts and ultimately the Supreme Court, weāre not likely to have a lot of clarity on the law in this area.ā