Slashdot readers schwit1 and Another Random Kiwi share the breaking news that FTX founder Sam Bankman-Fried has been found guilty of fraud. From the Associated Press: FTX founder Sam Bankman-Fried's spectacular rise and fall in the cryptocurrency industry -- a journey that included his testimony before Congress, a Super Bowl advertisement and dreams of a future run for president -- hit a new bottom Thursday when a New York jury convicted him of fraud in a scheme that cheated customers and investors of at least $10 billion. After the monthlong trial, jurors rejected Bankman-Fried's claim during four days on the witness stand in Manhattan federal court that he never committed fraud or meant to cheat customers before FTX, once the world's second-largest crypto exchange, collapsed into bankruptcy a year ago.

"His crimes caught up to him. His crimes have been exposed," Assistant U.S. Attorney Danielle Sassoon told the jury of the onetime billionaire just before they were read the law by Judge Lewis A. Kaplan and began deliberations. Sassoon said Bankman-Fried turned his customers' accounts into his "personal piggy bank" as up to $14 billion disappeared. [...] U.S. Attorney Damian Williams told reporters after the verdict that Bankman-Fried "perpetrated one of the biggest financial frauds in American history, a multibillion dollar scheme designed to make him the king of crypto." "But here's the thing: The cryptocurrency industry might be new. The players like Sam Bankman-Fried might be new. This kind of fraud, this kind of corruption is as old as time and we have no patience for it," he said.

Amazon used a secret algorithm to boost prices to U.S. households by more than $1 billion, says the FTC in ia new court filing. "The FTC lawsuit was filed in September but many details were withheld until Thursday when a version of the lawsuit with fewer redactions was made public in U.S. District Court in Seattle," notes Reuters. From the report: Amazon, which has 1 billion items in its online superstore, created a "secret algorithm internally code named 'Project Nessie' to identify specific products for which it predicts other online stores will follow Amazon's price increases. ... Amazon used Project Nessie to extract more than a billion dollars directly from Americans' pocketbooks," the FTC said.

Amazon began testing the pricing algorithm in 2010 to see if other online retailers tracked its prices and to raise prices for products that were likely to be tracked by competitors, the complaint said. After outside retailers began matching or increasing their own prices, Amazon would continue to sell the product at an inflated price, the FTC alleged, which resulted in $1 billion in excess profit. Amazon paused the algorithm during its Prime Day sales events and the holiday shopping season when there was more media and customer attention on the online retailer, the FTC said.

"After the public's focus turned elsewhere, Amazon turned Project Nessie back on and ran it more widely to make up for the pause," the lawsuit said. Amazon in April 2018 used it to set prices for more than 8 million items purchased by customers that collectively cost almost $194 million, the complaint said, before pausing it in 2019. Amazon retail executive Doug Herrington in January 2022 asked about using "old friend Nessie, perhaps with some new targeting logic" to boost profits for Amazon's retail arm, the complaint said. The FTC complaint also accuses Amazon of seeking to hide information about operations from antitrust enforcers by using the Signal messaging app's disappearing message feature and said the company destroyed communications from June 2019 to early 2022. Amazon also required sellers using its Prime feature to utilize its logistics and delivery services, leading to increased fees for sellers who used its fulfillment services from 27% in 2014 to 39.5% in 2018, as per the FTC. Furthermore, the complaint mentioned that Amazon treated Walmart.com differently, not allowing it to sell on its platform and allegedly deterring Walmart from offering discounts to shoppers who picked up their purchases from Walmart stores.

Further reading: Amazon Boosted Junk Ads and Deleted Messages To Thwart Antitrust Probe, FTC Says

An anonymous reader quotes a report from the Associated Press: Pennsylvania cannot enforce a regulation to make power plant owners pay for their planet-warming greenhouse gas emissions, a state court ruled Wednesday, dealing another setback to the centerpiece of former Gov. Tom Wolf's plan to fight global warming. The Commonwealth Court last year temporarily blocked Pennsylvania from becoming the first major fossil fuel-producing state to adopt a carbon-pricing program, and the new ruling makes that decision permanent. The ruling is a victory for Republican lawmakers and coal-related interests that argued that the carbon-pricing plan amounted to a tax, and therefore would have required legislative approval. Wolf, a Democrat, had sought to get around legislative opposition by unconstitutionally imposing the requirement through a regulation, they said. The court agreed in a 4-1 decision.

The regulation written by Wolf's administration had authorized Pennsylvania to join the multistate Regional Greenhouse Gas Initiative, which imposes a price and declining cap on carbon dioxide emissions from power plants. It would be up to Wolf's successor, Democratic Gov. Josh Shapiro, to decide whether to appeal the decision to the state Supreme Court. Shapiro's administration had no comment Wednesday on whether it would appeal, and Shapiro himself hasn't said publicly whether he would follow through on the plan to join the consortium, should the courts allow it. Still, Shapiro is "focused on addressing climate change, reducing emissions, and protecting public health while creating jobs and protecting consumers," Shapiro's administration said in a statement.

Apple on Wednesday lost a bid to block a mass London lawsuit worth up to $2 billion which accuses the tech giant of hiding defective batteries in millions of iPhones. From a report: The lawsuit was brought by British consumer champion Justin Gutmann on behalf of around 24 million iPhone users in the United Kingdom. Gutmann is seeking damages from Apple on their behalf of up to 1.6 billion pounds ($1.9 billion) plus interest, with the claim's midpoint range being 853 million pounds. His lawyers argued Apple concealed issues with batteries in certain phone models by "throttling" them with software updates and installed a power management tool which limited performance.

Apple, however, said the lawsuit was "baseless" and strongly denied batteries in iPhones were defective, apart from in a small number of iPhone 6s models for which it offered free battery replacements. The company sought to get the case thrown out of court, but the Competition Appeal Tribunal (CAT) said Gutmann's case can proceed in a written ruling on Wednesday.

Apple could be forced to scale back its App Store fees for developers after one of the European Union's antitrust watchdogs said its commissions violate the bloc's rules. From a report: In the latest twist in a long-running clash between the Dutch Authority for Consumers & Markets and the US tech giant, officials ruled that Apple's commission on certain app subscriptions are an abuse of the company's market power. In a confidential decision seen by Bloomberg, the Dutch regulator said Apple's rules unfairly target companies that offer subscription services, such as Match Group's dating app Tinder, which has to pay high commission rates on app sales, unlike ones that don't have paid digital content.

Apple harms such companies "by charging them an additional and inexplicably higher fee," according to the Dutch decision, which was sent in July. Apple had earlier offered to reduce app sale commission in the Netherlands from 30% to 27%, but the ACM's confidential findings state this offer doesn't go far enough. The decision could pave the wave for greater antitrust scrutiny across the 27-nation EU on the fairness of Apple's fee structure for different apps. The European Commission in Brussels is already investigating how Apple restricts apps from informing users of cheaper subscriptions outside the app store.

Nokia sued Amazon in courts across three continents, alleging the e-commerce giant uses its technologies in streaming services and devices without authorization. From a report: The suits were filed in the US, Germany, India, the UK, and the European Unified Patent Court, Arvin Patel, Nokia's Chief Licensing Officer said in a statement on the company's website. Separately, a suit was also filed against HP in the US over video-related technologies, he said.

Blake Brittain reports via Reuters: A judge in California federal court on Monday trimmed a lawsuit by visual artists who accuse Stability AI, Midjourney and DeviantArt of misusing their copyrighted work in connection with the companies' generative artificial intelligence systems. U.S. District Judge William Orrick dismissed some claims from the proposed class action brought by Sarah Andersen, Kelly McKernan and Karla Ortiz, including all of the allegations against Midjourney and DeviantArt. The judge said (PDF) the artists could file an amended complaint against the two companies, whose systems utilize Stability's Stable Diffusion text-to-image technology.

Orrick also dismissed McKernan and Ortiz's copyright infringement claims entirely. The judge allowed Andersen to continue pursuing her key claim that Stability's alleged use of her work to train Stable Diffusion infringed her copyrights. "Even Stability recognizes that determination of the truth of these allegations -- whether copying in violation of the Copyright Act occurred in the context of training Stable Diffusion or occurs when Stable Diffusion is run -- cannot be resolved at this juncture," Orrick said.

Orrick agreed with all three companies that the images the systems actually created likely did not infringe the artists' copyrights. He allowed the claims to be amended but said he was "not convinced" that allegations based on the systems' output could survive without showing that the images were substantially similar to the artists' work. The judge also dismissed other claims from the artists, including that the companies violated their publicity rights and competed with them unfairly, with permission to refile. Orrick dismissed McKernan and Ortiz's copyright claims because they had not registered their images with the U.S. Copyright Office, a requirement for bringing a copyright lawsuit.

Pete Syme reports via Insider: A British software company is giving Meta 30 days to stop using the name Threads in the UK because it owns the trademark. Threads Software Limited says its lawyers wrote to the Facebook and Instagram parent company on Monday. If Meta doesn't stop using the name Threads, Threads Software Limited says it will seek an injunction from the courts.

The British company trademarked Threads in 2012 for its intelligent messaging hub, which can store a company's emails, tweets, and voice over internet protocol phone calls in a cloud database. In a press release, it said it had declined the four offers that Meta's lawyers made to purchase its domain name "threads.app." Then when Meta launched Threads, its social media app designed to compete with Elon Musk's X, the British company says it was removed from Facebook. John Yardley, the managing director of Threads Software Limited, said the business "faces a serious threat from one of the largest technology companies in the world."

"We recognize that this is a classic 'David and Goliath' battle with Meta," said Yardley. "And whilst they may think they can use whatever name they want, that does not give them the right to use the Threads brand name."

Google Chief Executive Sundar Pichai took the stand Monday in the tech giant's antitrust trial, a pivotal moment in a case that could result in major changes to the company's search engine. From a report: Pichai described Google's search dominance as the result of its innovation and early investment in its Chrome browser. "We realized early on that browsers are critical to how people are able to navigate and use the web," Pichai said during questioning by Google lawyer John Schmidtlein.

"It became very clear early on that if you make the user's experience better, they would use the web more, they would enjoy using the web more, and they would search more in Google as well," Pichai said. [...] The nonjury trial is being heard by U.S. District Judge Amit Mehta, who could ultimately order a breakup or other changes to Google's business practices. Schmidtlein, Google's lead counsel, questioned Pichai about the deal at the heart of the case: the search giant's contract with Apple that makes it the default search engine on Apple's Safari web browser. The Apple deal "makes it very, very seamless and easy for users to use our services," Pichai said. "We know that making it the default will lead to increased usage of our products and services, particularly Google search in this case. So there is clear value in that and that's what we were looking for."

The Wall Street Journal reports that more than three million Americans have now had a total of $127 billion in student loans flagged for cancellation. (Which for 3 million would average out to over $40,000 apiece).

Interestingly, the article notes this happened despite a set back for forgiveness in America's highest court this June: The high court ruled that the Biden administration couldn't cancel hundreds of billions of dollars for tens millions of student-loan holders, reasoning that the authority for such a broad-based policy doesn't exist under the law. While that closed one path, Biden tapped a variety of different tools that no previous president had ever used to this extent. Since taking office in 2021, the Biden administration has arranged to cancel loans equal to around 30% of the total projected cost of its blocked mass cancellation plan.

Long-time Slashdot reader theodp writes: Over at Computers Are Bad, J.B. Crawford [a senior professional services engineer at GitLab] offers a pretty epic takedown of the startup "Cooler Screens", which has replaced the formerly transparent cooler doors at Walgreens and other stores with six-foot, heat-generating 4K resolution digital screen doors that block the view of the merchandise that's behind them to enable IoT "contextual advertising".

"I find myself looking at a Walgreens cooler that just two years ago was covered in clear glass admitting direct inspection of which tall-boy teas were in stock," Crawford writes of his experience. "Today, it's an impenetrable black void. Some Walgreens employee has printed a sheet of paper, 'TEA' in 96-point Cambria, and taped it to the wall above the door...."

While Cooler Screens was first tested by Walgreens in 2018 and backed by Microsoft VC money, Cooler Screens is now suing Walgreens, claiming the pharmacy chain obstructed a nationwide rollout of the technology and demanded its removal from stores. Walgreens said in court documents that technical issues plagued the technology, making it difficult for customers to see what was available inside the coolers, the report said. According to Walgreens, the screens froze or went dark, showed incorrect products or prices, and even sparked and caught fire in some instances. Cooler Screens, on the other hand, blamed what it called Walgreens' aging and poorly maintained electrical and refrigeration infrastructure for the technical difficulties.

Still, Crawford notes that Kroger has announced it's adding Cooler Screens to 500 more of their stores, the result of a three-year pilot that apparently went better than Walgreens. But he isn't buying claims that "90%+ of consumers no longer prefer traditional glass cooler doors," and closes with a final observation, "I am nodding and appropriately chuckling when a stranger says 'remember when you could see through these?' as they fight against retail innovation to purchase one of the products these things were supposed to promote. You cannot say they aren't engaged, in a sense."
Earlier on Slashdot: Shoppers React as Grocers Replace Freezer Doors with Screens Playing Ads.

Brandon Vigliarolo reports via The Register: After over seven years of legal battles, a group of former HP employees who claim the venerable firm discriminated against older staff when culling jobs has won a $18 million settlement. Hewlett Packard's offshoots, HP and Hewlett Packard Enterprise (HPE) have agreed to cough up just over a day's combined profits for the last quarter to settle a class-action case brought by employees who were over 40 and got laid off when the company split in 2015. The group sued HP and HPE in 2016 claiming both the new entities and the old Hewlett Packard had unfairly targeted older employees for layoffs as far back as 2012.

Two classes were designated in the lawsuit -- 146 former staff accusing HP and HPE of age discrimination on US Age Discrimination in Employment Act (ADEA) grounds, and 212 accusing their former employer of the same based on California state labor laws. The settlement notice [PDF], which was filed in the US District Court for the Northern District of California in late September and preliminarily approved by a judge on Thursday, doesn't include any admission of guilt on HP or HPE's part -- quite the opposite, in fact. "Throughout the litigation, each Defendant has denied, and continues to deny, the allegations described above," lawyers for the plaintiffs wrote in the settlement notice. Nonetheless, the settlement notice was filed without opposition from HP and HPE. [...]

Judge Edward Davila determined the settlement was "fair, adequate and reasonable" yesterday, and will issue a final order later, a draft [PDF] of which was also filed with the court in September. If approved without changes, each of the 358 plaintiffs in the California case stand to earn $50,279 in gross individual recovery. Net of attorney's fees, costs and expenses, however, that total shrinks to a "minimum of $15,000," court filings indicate.

An anonymous reader quotes a report from Ars Technica: Sam Bankman-Fried took the stand in his criminal trial today in an attempt to avoid decades in prison for alleged fraud at cryptocurrency exchange FTX and its affiliate Alameda Research. [...] Some of the alleged fraud relates to how Alameda borrowed money from FTX. In testimony today, "Bankman-Fried said he believed that under FTX's terms of service, sister firm Alameda was allowed in many circumstances to borrow funds from the exchange," the WSJ wrote. Bankman-Fried reportedly said the terms of service were written by FTX lawyers and that he only "skimmed" certain parts. "I read parts in depth. Parts I skimmed over," Bankman-Fried reportedly said after [U.S. District Judge Lewis Kaplan] asked if he read the entire terms of service document.

Sassoon asked Bankman-Fried if he had "any conversations with lawyers about Alameda spending customer money that was deposited into FTX bank accounts," according to Bloomberg's live coverage. "I don't recall any conversations that were contemporaneous and phrased that way," Bankman-Fried answered. "I had so many conversations with lawyers later when we were trying to reconcile things in November 2022," Bankman-Fried also said. "There were conversations around Alameda being used as a payment processor, a payment agent for FTX. I frankly don't recall conversations with lawyers or otherwise about the usage of the funds or the North Dimension accounts." North Dimension was an Alameda subsidiary. The Securities and Exchange Commission has alleged that "Bankman-Fried directed FTX to have customers send funds to North Dimension in an effort to hide the fact that the funds were being sent to an account controlled by Alameda." [...]

In an overview of the alleged crimes, the indictment said Bankman-Fried "misappropriated and embezzled FTX customer deposits and used billions of dollars in stolen funds... to enrich himself; to support the operations of FTX; to fund speculative venture investments; to help fund over a hundred million dollars in campaign contributions to Democrats and Republicans to seek to influence cryptocurrency regulation; and to pay for Alameda's operating costs." He was also accused of making "false and fraudulent statements and representations to FTX's investors and Alameda's lenders." SBF's legal team decided that he would take the stand in his own defense -- a risky decision by legal observers as he will have to face cross-examination from federal prosecutors. In a rather unusual move, Judge Kaplan sent the jury home for a day to conduct a hearing on whether certain parts of Bankman-Fried's testimony are admissible.

During his testimony, Bankman-Fried discussed various aspects of the case, including FTX's terms of service, loans from Alameda to him and other executives, a hack into FTX, and his use of the encrypted messaging service Signal. Live paywall-free updates of the trial are available here.

SonicSpike shares a report from Politico: An agency set up under Donald Trump to protect elections and key U.S. infrastructure from foreign hackers is now fighting off increasingly intense threats from hard-right Republicans who argue it's gone too far and are looking for ways to rein it in. These lawmakers insist work by the Cybersecurity and Infrastructure Security Agency to combat online disinformation during elections singles out conservative voices and infringes upon free speech rights -- an allegation the agency vehemently denies and the Biden administration is contesting in court. The accusations started in the wake of the 2020 election and are ramping up ahead of 2024, with lawmakers now calling for crippling cuts at the agency. "CISA has blatantly violated the First Amendment and colluded with Big Tech to censor the speech of ordinary Americans," Rand Paul (R-Ky.), the ranking member of the Senate Homeland Security Committee, which oversees CISA, said in a statement to POLITICO.

The fight over CISA underscores yet another way Trump's election fraud claims are reverberating into 2024. And though the hard right doesn't have enough votes to defund CISA today, the growing backlash against it has supporters worried that a hard-right faction could hobble the agency in the years ahead -- undermining its efforts not just to secure future elections, but also protect key U.S. and federal networks from major hacks. CISA had broad bipartisan support in Congress when lawmakers passed legislation creating the agency in 2018. At the ceremony where Trump signed it into law, he called it "very, very important legislation" to protect the U.S. against both nation-state hackers and cybercriminals. But when Chris Krebs, the then-head of CISA, debunked Trump's 2020 election fraud claims, the president fired him. And since the GOP assumed control of the House in 2022, like-minded Republicans have been ratcheting up their scrutiny of the agency. [...]

Conservatives now argue that activity has become a smokescreen for left-leaning government censorship. In Congress and within the courts, they contend that pressure from federal agencies like CISA led social media companies to limit the spread of information perceived as damaging to Joe Biden's campaign, such as stories relating to Hunter Biden. In a sign of trouble for an agency once boasting strong bipartisan support, 108 Republicans supported the failed push to cut CISA's budget last month -- a near majority within the conference. Backers of the budget cut included a swathe of increasingly influential hard-right lawmakers, like Jordan and James Comer (R-Ky.), chair of the powerful House Oversight Committee. Those with direct oversight over CISA also backed the vote, such as the chief of the Homeland Security Committee, Mark Green (R-Tenn.), and another panel member, August Pfluger (R-Texas).

Meta Platforms was sued by California and a group of more than two dozen states over claims that its social-media platforms Instagram and Facebook exploit youths for profit and feed them harmful content. From a report: The suit, filed in federal court in California, adds to growing scrutiny of social media giants over how they serve their youngest users.

404 Media (working with Court Watch) reports on a $30 Million cash-for-Bitcoin laundering ring operating in the heart of New York For years, a gang operating in New York allegedly offered a cash-for-Bitcoin service that generated at least $30 million, with men standing on street corners with plastic shopping bags full of money, drive-by pickups, and hundreds of thousands of dollars laid out on tables, according to court records.

The records provide rare insight into an often unseen part of the criminal underworld: how hackers and drug traffickers convert their Bitcoin into cash outside of the online Bitcoin exchanges that ordinary people use. Rather than turning to sites like Coinbase, which often collaborate with and provide records to law enforcement if required, some criminals use underground, in-real-life Bitcoin exchanges like this gang which are allegedly criminal entities in their own right.

In a long spanning investigation by the FBI involving a confidential source and undercover agents, one member of the crew said "that at least some of his clients made money by selling drugs, that his wealthiest clients were hackers, and that he had made approximately $30 million over the prior three years through the exchange of cash for virtual currency," the court records read.
Thanks to user Slash_Account_Dot for sharing the news.

An anonymous reader quotes a report from NBC News: The Supreme Court on Friday blocked in full a lower court ruling that would have curbed the Biden administration's ability to communicate with social media companies about contentious content on such issues as Covid-19. The decision in a short unsigned order (PDF) puts on hold a Louisiana-based judge's ruling in July that specific agencies and officials should be barred from meeting with companies to discuss whether certain content should be stifled. The Supreme Court also agreed to immediately take up the government's appeal, meaning it will hear arguments and issue a ruling on the merits in its current term, which runs until the end of June. Three conservative justices noted that they would have denied the application: Samuel Alito, Clarence Thomas and Neil Gorsuch.

"At this time in the history of our country, what the court has done, I fear, will be seen by some as giving the government a green light to use heavy-handed tactics to skew the presentation of views on the medium that increasingly dominates the dissemination of news. That is most unfortunate," Alito wrote in a dissenting opinion. GOP attorneys general in Louisiana and Missouri, along with five social media users, filed the underlying lawsuit, alleging that U.S. government officials went too far in what they characterize as coercion of social media companies to address posts, especially those related to Covid-19. The individual plaintiffs include Covid-19 lockdown opponents and Jim Hoft, the owner of the right-wing website Gateway Pundit. They claim that the government's actions violated free speech protections under the Constitution's First Amendment.

echo123 shares a report from the Associated Press: Thousands of information technology workers contracting with U.S. companies have for years secretly sent millions of dollars of their wages to North Korea for use in its ballistic missile program, FBI and Department of Justice officials said. The Justice Department said Wednesday that IT workers dispatched and contracted by North Korea to work remotely with companies in St. Louis and elsewhere in the U.S. have been using false identities to get the jobs. The money they earned was funneled to the North Korean weapons program, FBI leaders said at a news conference in St. Louis.

Court documents allege that North Korea's government dispatched thousands of skilled IT workers to live primarily in China and Russia with the goal of deceiving businesses from the U.S. and elsewhere into hiring them as freelance remote employees. The workers used various techniques to make it look like they were working in the U.S., including paying Americans to use their home Wi-Fi connections, said Jay Greenberg, special agent in charge of the St. Louis FBI office. Greenberg said any company that hired freelance IT workers "more than likely" hired someone participating in the scheme. An FBI spokeswoman said Thursday that the North Koreans contracted with companies across the U.S. and in some other countries. "We can tell you that there are thousands of North Korea IT workers that are part of this," spokeswoman Rebecca Wu said. Federal authorities announced the seizure of $1.5 million and 17 domain names as part of the investigation, which is ongoing. FBI officials said the scheme is so prevalent that companies must be extra vigilant in verifying whom they are hiring, including requiring interviewees to at least be seen via video.

The IT workers generated millions of dollars a year in their wages to benefit North Korea's weapons programs. In some instances, the North Korean workers also infiltrated computer networks and stole information from the companies that hired them, the Justice Department said. They also maintained access for future hacking and extortion schemes, the agency said. Officials didn't name the companies that unknowingly hired North Korean workers, say when the practice began, or elaborate on how investigators became aware of it. But federal authorities have been aware of the scheme for some time.

Can you heat up a pan to 30,000 degrees Fahrenheit? That's the burning question at the center of this proposed class action lawsuit, which claims the advertising for SharkNinja's nonstick cookware violates the laws of physics and thermodynamics. From a report: While SharkNinja is the company best known for its Shark robovacs and Ninja kitchen gadget, this lawsuit takes issue with the Ninja NeverStick Premium Cookware collection, a line of pots and pans it advertises as having superior nonsticking and nonflaking qualities thanks to its manufacturing process.

Instead of making its pans at a measly 900-degree temperature that other brands use, SharkNinja says it heats up the cookware to a maximum of 30,000 degrees Fahrenheit. That process, according to SharkNinja, fuses "plasma ceramic particles" to the surface of the pan, "creating a super-hard, textured surface that interlocks with our exclusive coating for a superior bond." But Patricia Brown, the person who filed this lawsuit, isn't buying it. As cited in Brown's lawsuit, NASA recently said the "surface of the Sun is a blisteringly hot 10,340 degrees Fahrenheit," meaning SharkNinja's manufacturing process reaches about three times that temperature.

An anonymous reader quotes a report from Reuters: The U.S. Securities and Exchange Commission dropped claims against two Ripple Labs executives in its lawsuit alleging the blockchain company violated U.S. securities law, according to a court filing in New York on Thursday. The agency said in court papers it is dropping claims that Ripple Chief Executive Brad Garlinghouse and co-founder Chris Larsen aided and abetted sales of the cryptocurrency XRP which a judge has found amounted to unregistered sales of securities.

In its December 2020 lawsuit, the SEC accused Ripple of illegally raising more than $1.3 billion in an unregistered securities offering by selling XRP. U.S. District Judge Analisa Torres in Manhattan granted Ripple a partial win in the case in July, finding that sales of XRP on public exchanges were not unregistered securities offerings. Torres subsequently rejected a request by the SEC to appeal that ruling. She also ruled partly in the SEC's favor, saying the agency had shown the company's $728.9 million of XRP sales to hedge funds and other sophisticated buyers had violated the law.

Garlinghouse and Larsen, who have harshly criticized the SEC throughout the case, issued lengthy statements accusing the agency of a political agenda to, in Larsen's words, "suffocate crypto in America." "Instead of looking for the criminals stealing customer funds on offshore exchanges that were courting political favor, the SEC went after the good guys," Garlinghouse said, an apparent reference to Sam Bankman-Fried, founder of crypto exchange FTX. The agency said in its papers that the next step in the case is for both sides to present to the judge on what the appropriate penalty is for Ripple.