A California judge has ruled that Ripple CEO Brad Garlinghouse will face trial over allegations that he made misleading statements about his financial interest in XRP. The lawsuit claims that Garlinghouse professed to be “very, very long XRP” while secretly selling millions of XRP on various exchanges in 2017.

The judge partially denied Ripple’s motion for summary judgment, allowing the case to proceed to trial. The trial will focus on whether Garlinghouse’s statements were indeed misleading and whether XRP qualifies as a security under California law.

Ripple’s legal team argued that XRP does not meet the definition of a security under the Howey Test, but the judge disagreed. The judge noted that a reasonable investor could have derived an expectation of profit from Ripple’s efforts to facilitate XRP’s use in cross-border payments, rather than just general cryptocurrency market trends.

Ripple’s Chief Legal Officer, Stu Alderoty, expressed relief that the class action claims were dismissed, but the company still faces the individual state law claim. The trial will be closely watched by the crypto community, as it sets significant precedents for regulating crypto assets and how executives’ statements are interpreted under securities laws.