The U.S. Court of Appeals for the Ninth Circuit affirmed a district court's summary judgment ruling in favor of Ripple Labs, Inc. in *Sostack v. Ripple Labs, Inc.*, marking another legal victory for the cryptocurrency company in ongoing securities litigation.
The three-judge panel, consisting of Circuit Judges Rawlinson, Miller, and Sanchez, unanimously upheld the lower court's decision that the three-year statute of repose in Section 13 of the Securities Act of 1933 bars lead plaintiff Bradley Sostack's claims that Ripple issued unregistered securities in violation of Section 12(a)(1) of the Act.
The case centers on XRP, a cryptocurrency created when the XRP Ledger blockchain was launched in 2012. The Ledger's code created 100 billion XRP units, with Ripple Labs receiving 80 billion of those units. The Ledger became publicly available in either late 2012 or early 2013. In 2017, Ripple began releasing its XRP holdings in monthly tranches of one billion XRP.
Sostack purchased XRP on the Poloniex cryptocurrency exchange in January 2018. Later that year, a class action complaint was filed against Ripple Labs, XRP II, LLC, and Bradley Garlinghouse, Ripple's CEO, along with several other defendants.
The district court, presided over by Judge Phyllis J. Hamilton in the U.S. District Court for the Northern District of California, originally granted summary judgment in favor of Ripple. Sostack, representing himself and proposed federal and California state securities claims classes, appealed the decision to the Ninth Circuit.
The statute of repose issue proved decisive in the case. Under Section 13 of the Securities Act of 1933, securities claims must be brought within three years of the alleged violation. This differs from a statute of limitations, which typically begins running when a plaintiff discovers or should have discovered the violation. A statute of repose creates an absolute time bar regardless of when discovery occurs.
The Ninth Circuit's decision, filed Jan. 27, 2026, represents a significant development in the ongoing legal battles surrounding cryptocurrency regulation and enforcement. The court heard oral arguments on Dec. 4, 2025, in San Francisco before issuing its memorandum opinion.
The ruling comes as part of broader litigation involving Ripple Labs and its XRP cryptocurrency. The company has faced multiple legal challenges regarding whether XRP constitutes a security under federal law. The Securities and Exchange Commission has separately pursued enforcement action against Ripple, arguing that the company's XRP sales violated securities laws.
Sostack's lawsuit was filed as a class action seeking to represent purchasers of XRP who allegedly suffered losses as a result of what they claimed were unregistered securities offerings. The plaintiff argued that Ripple's distribution of XRP constituted an investment contract under the Howey test, the Supreme Court standard for determining when a transaction constitutes a security.
However, the Ninth Circuit did not reach the substantive question of whether XRP constitutes a security. Instead, the court focused on the timing requirements under federal securities law, finding that the statute of repose barred Sostack's claims regardless of their merits.
The three-year statute of repose begins running from the time of the alleged violation, not from when the plaintiff learned of it or suffered damages. This creates challenges for investors in rapidly evolving markets like cryptocurrency, where the regulatory landscape and investor understanding continue to develop.
Ripple's legal team successfully argued that even if XRP sales violated securities laws, Sostack's 2018 purchase occurred too late to bring claims under the Act's timing requirements. The district court accepted this argument, and the Ninth Circuit affirmed the reasoning.
The decision is designated as unpublished and "not appropriate for publication," meaning it does not create binding precedent except as provided by Ninth Circuit Rule 36-3. However, the ruling still provides guidance for similar cases involving cryptocurrency securities claims and statute of repose defenses.
For Ripple Labs, the decision represents another favorable outcome in its ongoing legal battles. The company has consistently maintained that XRP is not a security and that its distribution complied with applicable laws. This victory adds to previous favorable rulings the company has received in various proceedings.
The cryptocurrency industry continues to grapple with regulatory uncertainty as courts and agencies work to apply traditional securities laws to digital assets. The timing requirements for securities claims add another layer of complexity for investors seeking to challenge cryptocurrency offerings in court.
Looking ahead, the decision may influence how other cryptocurrency-related securities cases are litigated, particularly regarding timing defenses. Plaintiffs in similar cases will need to carefully consider statute of repose limitations when bringing claims against cryptocurrency companies.
The case demonstrates the importance of prompt legal action in securities matters and the challenges faced by investors in emerging markets where regulatory clarity may develop slowly. As the cryptocurrency industry continues to evolve, courts will likely continue to address these timing and procedural issues alongside substantive questions about digital asset regulation.