Complaint: Ripple Labs, Inc. (“Ripple”), Bradley Garlinghouse (“Garlinghouse”), and Christian A. Larsen

B. 
XRP Are Not “Currency” Under the Federal Securities Laws 
353. In May 2015, Ripple and XRP II agreed (i) to settle charges brought by the United 
States Department of Justice and FinCEN for failing to register as a “Money Services Business” 
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under the Bank Secrecy Act and (ii) to comply with other regulatory requirements with respect to 
Ripple’s XRP sales, which the settlement called “virtual currency.” 
354. Consequently, Ripple has at times suggested that XRP are not securities, but instead 
exempt from the Securities Act altogether as “currencies.” 
355. XRP is not “currency” under the federal securities laws.
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356. XRP has not been designated as legal tender in any jurisdiction. XRP is not issued 
by, nor is backed by the full faith and credit of, any country, national government, central bank, or 
other central monetary authority. A “native currency” that operates, for example, on Ripple’s 
decentralized network of blockchain technology is a specialized instrument for a particular computer 
network, not legal tender. Similarly, using XRP as a “bridge” between two real, fiat currencies does 
not bestow legal tender status on XRP. 
357. Moreover, Ripple has never offered or sold XRP as “currency,” as that term is used 
in the federal securities laws. Throughout the Offering, Ripple never restricted offers or sales of 
XRP solely to purchasers who had a need for alternatives to traditional, fiat currencies, nor did 
Ripple promote XRP as an instrument for consumers to purchase goods or services.
358. Instead, Ripple and its executives repeatedly publicly disclaimed that XRP was 
“currency” and tried to dissuade investors from thinking about XRP as “currency.”
359. For example, in June 2016, Cryptographer-1 explained in a public XRP Chat post:
“We do not plan to encourage use of XRP as an alternative to Bitcoin or as a direct payment 
method at this time.” 
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FinCEN has repeatedly reiterated its view that “virtual currency” that may be converted for 
traditional fiat currencies may still be subject to the federal securities laws “regardless of other 
intended purposes” for the convertible virtual currency. See, e.g., FinCEN Guidance, Application of 
FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies, FIN-
2019-G001 (May 9, 2019) available at 
https://www.fincen.gov/sites/default/files/2019-
05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf
. 
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360. Two years later, in a press conference on March 14, 2018, Garlinghouse stated:
I almost never use the expression cryptocurrency. And the reason is today, 
these aren’t currencies. I can’t go down to Starbucks and buy a coffee with 
Bitcoin. I can’t buy . . . coffee with XRP. . . . Currencies, traditionally, are 
something you can use to transact efficiently and broadly. Very few people, 
even in the crypto community have used the, you know, Bitcoin or XRP to 
buy something. 
361. Similarly, in Garlinghouse’s Economic Club Speech in October 2019, a moderator 
asked Garlinghouse for an example of using XRP “to buy or sell something.” Garlinghouse 
responded: “XRP in my judgment, and really any crypto, I don’t think the use case is a consumer 
use case today. . . . [W]hen people talk about using crypto for consumer use case I go to the ‘well 
what problem are we trying to solve?’ . . . [I]n first world countries like the United States . . . I don’t 
see the consumer use for crypto any time soon,” or even for “95% of global GDP.” 
362. Ripple’s own current internal policies treat XRP as securities—not currency.
363. Since at least 2015, Ripple’s internal “Code of Conduct” has directed Ripple 
“[i]nsiders” not to “buy, sell, recommend or trade XRP” in possession of “information about Ripple 
or the Ripple protocol that has not been publicly announced, and which might reasonably affect the 
decision to buy or sell XRP”—effectively, a prohibition against insider trading, applicable to 
securities under the federal securities laws. 
364. Similarly, since at least July 2019, Ripple has banned certain members of its 
“leadership team” from entering into a “trading plan” for XRP “on the basis of information a 
reasonable person would consider important in making his or her decision to purchase, hold or sell 
XRP”—another implicit reference to rules governing insider trading. 
365. Even if some country were to recognize XRP as fiat “currency” at some point in the 
future, that would result from Defendants’ significant entrepreneurial and managerial efforts to date 
(and likely in the future), on which public investors expecting profit relied when making an 
investment of money into Defendants’ common enterprise. 
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