© Reuters. FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst/File Photo/File Photo

(Reuters) -U.S. District Judge Analisa Torres said Labs Inc’s institutional sales of its XRP digital token violated federal law because they constituted the unregistered offer and sale of investment contracts, according to a ruling on Thursday.

The SEC had accused the company and its current and former chief executives of conducting a $1.3 billion unregistered securities offering by selling XRP, which Ripple’s founders created in 2012.

Torres, who is based in New York, said the company’s $728.9 million of XRP sales to hedge funds and other institutional buyers amounted to unregistered sales of securities. However, Torres said the case must go to trial so a jury can decide other aspects of the SEC’s claims.