Ripple came close to shutting down rather than fighting the U.S. Securities and Exchange Commission, Chief Executive Brad Garlinghouse said, describing a decision he and co-founder Chris Larsen faced after the agency sued the company in 2020. Speaking at the University of Kansas School of Business earlier this week, Garlinghouse said the two seriously considered winding Ripple down and distributing its XRP holdings to shareholders. He described that as the easier path, against a government he said had “infinite power and resources.” Ripple holds a large amount of XRP, and Garlinghouse said the company could have handed it to shareholders on a pro rata basis and dissolved, effectively ending the case by ending the company. But they chose to fight because shutting down would have cost hundreds of jobs. “I’m glad in retrospect, but that was not obvious at the time,” he said.
The SEC lawsuit and the fight that followed
The SEC sued Ripple in 2020, alleging it had sold XRP as an unregistered security, and named Garlinghouse and Larsen personally. Garlinghouse said he met agency officials four times between 2017 and 2019 without a lawyer and was never told XRP might be treated as a security, which shaped his view that the company had been denied clear rules. He put Ripple’s legal costs at $150 million over the four-year fight. Ripple prevailed when Judge Analisa Torres ruled that XRP in itself is not a security. The two sides settled in May last year after the Trump administration installed new SEC leadership that has taken a more accommodating approach to crypto.
Why this matters for crypto regulation
The case had been closely watched by the entire crypto industry. A different outcome could have set a broad precedent. Ripple’s near-death decision shows how high the stakes were for one of the oldest blockchain companies. Garlinghouse’s remarks also highlight how unclear the rules were before the lawsuit. He has repeatedly said the SEC failed to provide a clear framework. The company’s legal victory, while partial, gave some breathing room to other projects. Still, some critics argue that the ruling left key questions unanswered. The SEC under its new leadership has dropped several other enforcement actions, signaling a shift in policy. But the regulatory environment remains fragmented, and many in crypto still wait for legislation. In the end, Ripple survived. But its CEO says it came within a hair of closing its doors.
