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Ripple and CEO Brad Garlinghouse say an ongoing lawsuit fails to prove how Garlinghouse committed fraud when allegedly sold millions of dollars worth of XRP in 2017.
Attorneys representing the San Francisco-based blockchain company said in a court motion Monday that lead actor Bradley Sostack did not prove a series of allegedly fraudulent claims made by employees of Garlinghouse and Ripple were anything like that.
In the United States, the threshold for what can be considered fraud is based on Federal Rule of Civil Procedure 9 (b), which requires a plaintiff to show two things: first, how the fraud was actually committed; second, that it was done so with wisely – that is, the defendants knew they were misleading others.
Ripple’s lawyers say the plaintiff’s modified complaint – which was filed in March – did not meet the first prerequisite:
“Plaintiff’s FAC [first amended complaint] identifies allegations that purport to contain false statements, ”the document reads. But these “alleged misrepresentations” cannot be considered fraudulent and “the plaintiff does not explain (and cannot) explain how and why these statements are false.”
In the case of Garlinghouse, the actor turns around statement he made on December 14, 2017, when, after being asked if he held an XRP as an investment, he said he was “very, very long XRP as a percentage of my personal balance sheet”.
In the amended complaint, the plaintiff claims that the XRP log shows that Garlinghouse “sold any XRP received from Ripple within days of that receipt” and that, rather than being long, “he was dumping XRP on retail investors in exchange for dollars and other cryptocurrencies. “
In total, Sostack claims that Garlinghouse sold 67 million XRP tokens (worth around $ 58 million on December 14) in 2017, which, he claims, counts as a misrepresentation as it coincides with the time he also publicly claimed to be “very, very long XRP.”
But Ripple disputes that the claim was fraudulent. Attorneys first dispute Sostack’s claim that Garlinghouse sold a sizeable share of his tokens: “Plaintiff does not state … what percentage of his personal balance sheet the alleged sales constitute.”
They also argue that just because Garlinghouse sold XRP doesn’t mean he wasn’t optimistic about the token’s prospects yet: “Selling a portion of your XRP holdings doesn’t mean the seller can’t also be ‘very, very long’ in the same asset as a percentage of the own personal budget. “
The statement continues: “As an example, a wine collector who accumulates a large collection of fine wines can be said to be ‘long’ on wine as a percentage of his net worth – which does not change if the collector decides to sell a poche. (or even many) bottles “.
Ripple’s lawyers are asking the court to file all three fraud counts without permission to modify and with prejudice. This will prevent plaintiff from re-indicting the company, or Garlinghouse, on similar charges for the remainder of the lawsuit.
Watch the full movement below:
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