A U.S. appeals court has affirmed the dismissal of federal securities claims against Ripple Labs , ruling that private lawsuits alleging unregistered sales of XRP are barred by the statute of repose under the Securities Act of 1933.
In a memorandum filed on January 27, the Ninth Circuit Court of Appeals upheld a district court’s decision granting summary judgment in favor of Ripple Labs and its executives, concluding that claims brought by lead plaintiff Bradley Sostack were filed too late under Section 13 of the Securities Act.
Court Rules XRP Was Publicly Offered As Early As 2013
The court held that XRP was “bona fide offered to the public” as early as 2013, triggering the three-year statute of repose that permanently limits when federal securities claims can be brought.
Because the original class action complaint was not filed until 2018, the panel ruled that the claims were time-barred as a matter of law.
According to the ruling, the XRP Ledger launched in either late 2012 or early 2013, at which point 100 billion XRP were created, with Ripple Labs receiving 80 billion units.
The court found it undisputed that Ripple sold hundreds of millions of XRP on the ledger’s built-in digital asset exchange and that those sales constituted public offerings, even if participation required technical sophistication.
Judges Reject Argument That 2017 XRP Releases Were A New Offering
The plaintiff argued that Ripple’s 2017 programmatic releases of XRP, distributed in monthly tranches of one billion tokens, amounted to a new securities offering or a new investment contract.
The court rejected that argument, finding no material change in the nature of XRP between 2013 and 2017 and emphasizing that all XRP remained fungible and interchangeable throughout that period.
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The panel also dismissed attempts to apply alternative legal frameworks, including the “economic reality” theory and tests used to assess integrated offerings for registration exemptions.
The judges warned that adopting such approaches in the context of statutes of repose would undermine the certainty those statutes are designed to provide, citing Supreme Court precedent emphasizing finality in securities litigation.
Decision Narrows Remaining Private Litigation Tied To XRP
The decision affirms the Northern District of California’s earlier ruling and limits appellate review to the certified federal securities claims, leaving no remaining federal claims in this action.
While separate from the Securities and Exchange Commission’s enforcement case against Ripple, the Ninth Circuit’s ruling resolves one of the longest-running private class actions tied to XRP’s early distribution.
The outcome effectively forecloses future federal securities lawsuits based on XRP offerings from the asset’s initial launch period, reinforcing judicial emphasis on timing and finality in digital asset litigation.
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