The United States Court of Appeals for the Ninth Circuit has now put a definitive end to one of the crypto industry’s longest-running legal battles by dismissing the Sostack v. Ripple Labs class action. This significant ruling concludes a protracted dispute, with the appellate panel determining that lead plaintiff Bradley Sostack’s federal securities claims were unequivocally "time-barred" by the Securities Act’s stringent three-year statute of repose.

The case itself was a consolidated class action originally initiated in 2018. It centered on serious allegations that Ripple Labs, its subsidiary XRP II, LLC, and CEO Brad Garlinghouse had violated federal securities laws. Specifically, the lawsuit claimed that XRP was sold as an unregistered security. Bradley Sostack, appointed as the lead plaintiff, purchased XRP in January 2018 during the apex of the crypto bull market. Following a subsequent price crash, Sostack proceeded to sue to recover his financial losses, arguing that Ripple had conducted an illegal public offering without the necessary registration statement.

However, the core of the lawsuit ran headlong into a critical federal deadline known as the statute of repose. Under Section 13 of the Securities Act, no legal action can be brought to enforce liability for unregistered sales more than three years after the security was "bona fide offered to the public." The Ninth Circuit ultimately concurred with the district court’s earlier finding, which established that this crucial three-year clock began ticking as early as 2013, and not in 2017 or 2018 as the plaintiffs had contended. The court highlighted that Ripple had made XRP available to the public in 2013, having sold over 500 million tokens on the XRP Ledger’s built-in exchange during that year.

Based on this firm 2013 start date, the three-year window within which to file a federal securities claim expired in 2016. Given that Sostack did not file his original complaint until 2018, his claims were considered "dead on arrival." The appellate panel, in affirming the lower court’s summary judgment in favor of Ripple, explicitly stated, "His federal securities claims are time-barred."

In a final attempt to salvage the case, the plaintiffs later argued that the company's activities in 2017 constituted a new offering, which they believed should have restarted the three-year clock. The Ninth Circuit firmly rejected this theory. It meticulously dismantled the notion that the 2017 sales were legally distinct from the initial 2013 launch. The court stated in its memorandum that "The nature of XRP did not change between 2013 and 2017," further emphasizing that "All XRP cryptocurrency remained fungible and interchangeable." This decisive rejection underscored the continuous nature of XRP's offering and solidified the court's interpretation of the statute of repose, effectively ending the prolonged legal challenge.