Ripple vs Youtube: CEO Garlinghouse tweets it out

Ripple CEO Brad Garlinghouse has come on Twitter to let the public know the company settled its legal dispute with Youtube.

The video streaming platform was being held responsible for failing to disable cryptocurrency scam accounts. These would impersonate Mr. Garlinhouse to announce XRP give-aways in return for a small initial payment, a popular scheme used to defraud investors.

In a complaint filed with the US district court in Northern California in April 2020, Ripple alleged victims had been defrauded out of millions of XRP valued at hundreds of thousands of dollars.

The “irreparable harm” to its public image, brand, and reputation was a “direct consequence of YouTube’s deliberate and inexplicable failure to address a pervasive and injurious fraud occurring on its platform”.

Mr. Garlinghouse published a series of tweets stating both firms reached a settlement: “Last year, Ripple and I sued YouTube for failing to enforce its own policies by allowing fake accounts (impersonating my/Ripple’s verified accounts) to conduct XRP giveaway scams. We’ve now come to a resolution to work together to prevent, detect and take down these scams.”

“Social platforms are starting to acknowledge their role in allowing crypto scams to persist and recognize the need to be part of the solution. Some like xrpforensics are helping detect/track stolen funds, but platforms need to lead the charge or it’s still just whack-a-mole.

“While specific settlement terms are confidential here, it’s clear to all that without accountability and action, trust erodes in this industry, at a crucial time when govts around the world are looking closely at crypto”, he added.

Ripple answers SEC charges: “Ripple never held an ICO”

The creator of the XRP ledger has been busy in legal affairs. The firm has recently issued an official response to the allegations of the U.S. Securities and Exchange Commission (SEC) over the illegal sale of XRP.

In the court documents filed in the Southern District of New York, the word “denies” comes up 440 times as Ripple refutes the SEC’s allegation that the firm engaged in an illegal securities offering when they first issued XRP to investors.

“Before this case, no securities regulator in the world has claimed that transactions in XRP must be registered as securities, and for good reason. The functionality and liquidity of XRP are wholly incompatible with securities regulation. To require XRP’s registration as a security is to impair its main utility… Treating XRP as a security… would subject thousands of exchanges, market-makers, and other actors in the gigantic virtual currency market to lengthy, complex and costly regulatory requirements never intended to govern virtual currencies.“

Ripple told the court the firm has never attempted to raise money on the promise of profits, which is the premise that gives the SEC authority to supervise the cryptocurrency ecosystem.

“As a matter of economic substance, XRP categorically differs from the various instruments and business arrangements that Congress authorized the SEC to regulate — all of which, unlike Ripple, involve “schemes devised by those who seek the use of the money of others on the promise of profits.” Howey, 328 U.S. at 299.

“Every other case in which courts have ruled that transactions involving a digital asset were investment contracts involved an issuer’s ICO or other promise of future tokens to raise money to develop a digital-asset product, as well as a contractual relationship between the issuer and asset purchasers. Ripple never held an ICO, never offered future tokens to raise money, and has no contracts with the vast majority of XRP holders”, Ripple told the court.

In December 2020, the SEC filed an action against Ripple Labs Inc. and two of its executives, for raising over $1.3 billion through an unregistered digital asset securities offering.