The federal case against Ripple Labs has taken an unexpected turn, as the legal team representing the firm and CEO Brad Garlinghouse have argued any statements they made overstating the utility of the XRP token can’t be proven false.

According to court filings obtained by Law360, lawyers for Ripple and Garlinghouse have argued plaintiff and XRP investor Bradley Sostack is unable to prove that Ripple misled investors with bullish claims about XRP and sold the token as an unregistered security. The legal team referred to Sostack’s statements as "unsupported leaps of logic." 

"In short, plaintiff fails to offer the factual allegations needed to show that Ripple's and Mr. Garlinghouse's statements were false when made," the filing said.

‘No utility at all’

Lawyers for Sostack used the argument that "XRP has no utility at all," something Ripple’s legal team says should have been raised in the initial lawsuit against the firm.

The original case against the crypto firm began in August 2019, when attorneys for Sostack filed a class-action lawsuit against Ripple, alleging that it had sold its XRP token as an unregistered security.

The case was amended in March to include a complaint accusing Garlinghouse of touting XRP to prospective investors while silently liquidating 67 million tokens from his holdings. The suit claimed that Ripple knowingly overstated the cryptocurrency's actual utility as a "bridge currency" to facilitate international payments.

According to the filing, lawyers argue that Sostack has been unable to explain why any alleged misstatements made by Ripple or Garlinghouse are in fact false.

"Plaintiff offers no reason and pleads no facts regarding how Mr. Garlinghouse's statement could confuse the public if it is true," the court filing stated.

Legal entanglements

In addition to Sostack’s case, a firm called Bitcoin Manipulation Abatement filed a lawsuit in a U.S. federal district court in May, accusing Ripple of similar charges: misleading investors by selling XRP as an unregistered security.