Ripple CEO Brad Garlinghouse has revealed that the company seriously considered shutting down after the U.S. Securities and Exchange Commission (SEC) filed its lawsuit against Ripple in December 2020.
Speaking during a discussion at the University of Kansas School of Business, Garlinghouse said he and Ripple co-founder Chris Larsen explored the possibility of dissolving the company and distributing Ripple’s XRP holdings to shareholders on a proportional basis rather than continuing a lengthy legal battle with U.S. regulators.
According to Garlinghouse, closing the company would have been the easier option when facing a government agency with what he described as “infinite power and resources.”
However, Ripple ultimately decided against that path because shutting down would have resulted in the loss of hundreds of jobs and ended the company’s operations entirely.
Instead, Ripple chose to fight the lawsuit despite the uncertainty surrounding the outcome.
Looking back on the decision, Garlinghouse said he is pleased with how events unfolded, but admitted that the future was far from clear when the lawsuit was first filed. He estimated that Ripple spent around $150 million defending itself during the years-long legal battle.
The SEC accused Ripple, Garlinghouse, and Larsen of conducting unregistered securities sales through XRP, alleging that the company raised more than $1.3 billion through those transactions. The case created significant uncertainty for Ripple’s business, affecting partnerships, institutional relationships, and its operations in the United States.
Garlinghouse also revealed that he met with SEC officials several times between 2017 and 2019 without legal representation. He said regulators never indicated during those meetings that XRP could be considered a security, which later influenced Ripple’s decision to challenge the agency’s claims in court.
A major turning point came in July 2023 when Judge Analisa Torres issued a mixed ruling. The court found that Ripple’s XRP sales on public cryptocurrency exchanges did not qualify as securities transactions. However, the judge ruled that certain direct sales to institutional investors violated securities laws.
As a result, Ripple was ordered to pay a $125 million civil penalty and was prohibited from conducting similar unregistered institutional XRP sales in the future.
Although Ripple and the SEC later attempted to settle the remaining issues in 2025, the court rejected a proposed agreement that would have reduced the penalty and removed the injunction. Both sides eventually dropped their appeals, bringing the legal battle to an end.
Despite the conclusion of the appeals process, the original court judgment remains in effect. Ripple is still required to pay the $125 million penalty and comply with restrictions related to future institutional XRP sales.
While the lawsuit created years of challenges, Ripple continued expanding its business throughout the legal fight. The company recently secured a Markets in Crypto-Assets (MiCA) license in Luxembourg, allowing it to offer regulated cryptocurrency services across the European Economic Area.
The approval provides Ripple with a clearer regulatory framework in Europe, where crypto regulations are more defined than they currently are in the United States.
Garlinghouse’s comments offer a rare look into one of the most difficult periods in Ripple’s history. What began as a discussion about potentially shutting down the company ultimately turned into a decision to fight one of the crypto industry’s most closely watched legal battles.
Although Ripple emerged from the case with financial penalties and ongoing restrictions, the company preserved its workforce, continued operating, and expanded internationally while broader regulatory debates over digital assets continue in the United States.
