Ripple replies to lawsuit: ‘You can’t prove we lied’
Ripple Labs Inc. and its CEO Brad Garlinghouse have fired back at plaintiffs in an ongoing lawsuit against them, claiming the investors can’t prove the company lied about XRP’s utility. The defendants claim that while XRP tokens weren’t being used to settle financial transactions in 2017, Ripple Labs and Garlinghouse never said otherwise.
Bradley Sostack sued Ripple in May 2018, alleging that the company failed to register its token with the U.S. Securities and Exchange Commission (SEC) even though it qualifies to be a security. In an amendment to his lawsuit in March 2020, he added Garlinghouse as a defendant, claiming that he was selling millions of dollars’ worth of XRP while simultaneously touting the token. Additionally, Sostack claimed that the two defendants “overstated the cryptocurrency‘s actual utility.”
Ripple and Garlinghouse are now fighting back, a report by Law360 has revealed. In their filing with a California federal court, the defendants claimed, “In short, plaintiff fails to offer the factual allegations needed to show that Ripple’s and Mr. Garlinghouse’s statements were false when made.”
They further claim that Sostack is urging the court to make unsupported leaps of logic.
In his amended lawsuit, Sostack alleged that “XRP has no utility at all.” This is a fact that Ripple and Garlinghouse failed to disclose to their investors, he claimed.
However, the defendants’ legal team urged the court to dismiss the claim, stating:
“What plaintiff actually alleged suggests only that, in 2017, some XRP was not being used to settle financial transactions. But plaintiff does not allege that Ripple or Mr. Garlinghouse ever said otherwise.”
The Sostack lawsuit is just one of the many against Ripple, a company that claimed to be out to change the cross-border money transfer with its XRP token. However, things have not panned out according to plan, with its co-founder showing little faith in the project and its partners folding under the weight of the pandemic.
The number of lawsuits against the firm has increased in the past two years, with Ripple repeatedly accused of selling unregistered securities. In May, a Puerto Rican company filed a lawsuit in California claiming that XRP is a security as the investors were led to believe they would profit from the tokens. The company further claimed that Ripple created XRP for the sole purpose of enriching a few individuals.