In its battle against a class-action lawsuit accusing the company of securities fraud, California-based crypto firm Ripple has filed court documents attempting to clear its name.
In the documents, the firm stated that Bradley Sostack, the plaintiff in the case, had failed to prove that the Ripple CEO, Brad Garlinghouse, had made false bullish statements in 2017. Sostak alleges that Garlinghouse intentionally misled investors about XRP’s real value.
Sostack filed his case against Ripple and Garlinghouse in August 2019. He claimed the company had effectively been offering the token for sale as an unregistered security.
Lawyers representing Sostack, who claims to have lost some USD 118,100 after investing in XRP, amended the lawsuit last March to include more allegations about the Ripple CEO.
Sostack claims Garlinghouse deceived investors, engineering an artificial spike in XRP prices so he could sell off his own stash of 67 million tokens for a profit.
In its latest court filing, Ripple’s legal team rejected talk of Garlinghouse’s alleged wrongdoings.
The Ripple lawyers rebuffed Sostack’s arguments, calling them “unsupported leaps of logic,” in documents filed with the Northern California District Court.
The firm’s legal team wrote,
“The plaintiff fails to offer the factual allegations needed to show that Ripple’s and Mr. Garlinghouse’s statements were false when made.”
Ripple’s lawyers were dismissive about claims that “some XRP may not have been used to settle cross-border transactions in 2017.”
On the basis of “these limited allegations,” the lawyers complained, Sostack was attempting to claim that “XRP has no such utility.”
The lawyers added,
“The latter does not follow from the former: a product’s usefulness or utility does not depend on its widespread adoption in the moment. The plaintiff has therefore not shown why statements about XRP’s utility are false. Thus, these purported misstatements cannot support the plaintiff’s fraud claims”.
Another argument raised by the company’s defense relies on the fact that “the plaintiff alleges that Ripple sold USD 91 million of XRP in the final quarter of 2017 and USD 167.7 million XRP in the first quarter of 2018.”
Ripple’s lawyers claimed that the plaintiff had “not explained why statements about Ripple’s XRP are false,” meaning that the “incurable” fraud claims were thus unsubstantiated.
In conclusion, the American company’s legal team stated that, as the plaintiff has not amended the issues “that led the court to dismiss his fraud claims from his original complaint” the suit should be dismissed with prejudice.