Judge Phyllis Hamilton found XRP could be a security when sold in the retail market and gave the go-ahead to a lawsuit over statements from Ripple CEO Brad Garlinghouse.

A civil securities lawsuit against Ripple Labs has been allowed to proceed by a United States federal court judge, denying Ripple's bid for summary judgment. The lawsuit alleges that Ripple CEO Brad Garlinghouse violated California securities laws by making misleading statements in a 2017 interview. While four allegations related to Ripple's failure to register XRP as a security were thrown out, the judge's order means that a jury will decide whether Garlinghouse's statements were misleading.

In the 2017 interview, Garlinghouse stated he was "very, very long" on XRP, but the lawsuit claims that this statement was false as he allegedly sold millions of XRP throughout that year. Ripple's chief legal officer, Stu Alderoty, stated that they were pleased that the court dismissed all class action claims, with only one individual state law claim remaining for trial.

Judge Phyllis Hamilton noted that Ripple argued the misleading statement claim should be dismissed as XRP is not a security under the Howey test, citing a previous ruling in July 2023. However, Hamilton disagreed, stating that XRP could be considered a security when sold to non-institutional investors who might expect profits from Ripple's efforts.

Alderoty emphasized that the ruling from Judge Torres in the SEC case remains unchanged and that this decision does not disturb it. While Torres' ruling was seen as a significant victory for the crypto industry in 2023, its impact has varied in subsequent cases. In the SEC's case against Terraform Labs, Judge Jed Rakoff disagreed with the Ripple ruling, leading Terraform to lose the case and pay a $4.5 billion settlement to the SEC.