U.S. Appeals Court Dismisses Long-Running Lawsuit Against Ripple and XRP

Ripple has scored another major legal win in the U.S., with a federal class-action lawsuit against the company dismissed. 

The landmark ruling, issued this week, further reinforces XRP’s non-security status previously established in New York last year. Specifically, the Ninth Circuit Court of Appeals upheld the dismissal of a California federal securities class action on January 27, formally closing the case against Ripple and XRP.

Key Points

• Ripple and XRP secure another major legal win in the United States.

• The Ninth Circuit dismissed a federal class action, rejecting the plaintiff’s arguments.

• The court emphasized that XRP has not changed in nature since its launch.

• Ripple is pushing for regulatory clarity, supporting the Market Clarity Act as the White House engages industry leaders.

Ninth Circuit Upholds Dismissal of Federal Class Action Against Ripple

The lawsuit, led by plaintiff Bradley Sostack, alleged that Ripple conducted an unregistered securities offering through XRP sales. Sostack claimed losses of about $118,100, arguing that Ripple’s statements created expectations of price appreciation.

The plaintiff also contended that Ripple’s three-year statute of repose should not apply because the company continued to sell XRP released from escrow.

However, the Ninth Circuit affirmed the district court’s ruling, noting that XRP was already publicly offered by 2013. According to the court, this triggered the statute of repose, which limits such claims to a three-year window. As a result, the plaintiff’s lawsuit was deemed six years too late.

Moreover, the court rejected claims that Ripple’s 2017 activities, such as escrow arrangements or renewed marketing, constituted a new or separate securities offering. The ruling emphasized that XRP has not changed in nature and remains the same asset it was at launch.

By affirming summary judgment, the Ninth Circuit has effectively closed the federal class action, removing a long-standing legal uncertainty in California courts regarding XRP.

Another Major Victory

This decision marks another major victory for Ripple and XRP after years of intense U.S. regulatory scrutiny. Both were previously locked in a five-year legal battle with the SEC in New York, which established XRP as a non-security and ruled that certain Ripple sales and distributions were not investment contracts.

Although the SEC case reached the appellate stage, both parties voluntarily withdrew the appeal after a new pro-crypto SEC administration took office.

Ripple Seeks Regulatory Clarity

After facing multiple legal battles, Ripple is now advocating for clearer regulation. CEO Brad Garlinghouse has backed the Market Clarity Act, urging the industry to choose clarity over chaos and work with policymakers to advance the bill.

However, with the Senate Banking Committee delaying the markup over disputed provisions, the White House has stepped in and scheduled a meeting with crypto and banking executives next week.