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TLDR
- Ripple CEO Brad Garlinghouse nearly dissolved the company after the SEC sued in 2020
- He and co-founder Chris Larsen considered distributing all XRP holdings to shareholders
- Ripple spent $150 million fighting the lawsuit over four years
- Judge Analisa Torres ruled in 2023 that XRP on public exchanges is not a security
- Ripple still faces a $125 million penalty and restrictions on institutional XRP sales
Ripple CEO Brad Garlinghouse revealed this week that he and co-founder Chris Larsen came close to shutting the company down after the U.S. Securities and Exchange Commission filed suit against them in December 2020.
Ripple CEO Says Company Considered Shutting Down After 2020 SEC Lawsuit
Ripple CEO Brad Garlinghouse said the company seriously considered shutting down after the U.S. SEC sued it in 2020. He said Ripple could have distributed its XRP holdings to shareholders and told the SEC it… pic.twitter.com/8xuSRIwdyI
— Wu Blockchain (@WuBlockchain) July 12, 2026
Speaking at the University of Kansas School of Business, Garlinghouse said the two men seriously discussed winding up operations and distributing Ripple’s XRP holdings to shareholders on a pro rata basis. He called that option the easier path, given that the SEC had what he described as “infinite power and resources.”
The plan was rejected because it would have meant ending hundreds of jobs. Garlinghouse said the decision to fight was not an obvious one at the time. “I’m glad in retrospect, but that was not obvious at the time,” he said.
The remarks were shared publicly on July 12 via Wu Blockchain and drew fresh attention to what went on inside Ripple in those early months after the lawsuit was filed.
The SEC Lawsuit and What It Cost
The SEC accused Ripple, Garlinghouse and Larsen of conducting unregistered securities sales through XRP. The agency said Ripple had raised more than $1.3 billion through those sales.
Garlinghouse said he met SEC officials four times between 2017 and 2019. He said he never had a lawyer present and was never told XRP could be treated as a security. That experience shaped his decision to contest the case.
Ripple spent around $150 million on the legal fight over four years. The lawsuit put pressure on its U.S. partnerships, institutional client access and overall business operations.
In July 2023, Judge Analisa Torres issued a split ruling. She found that Ripple’s XRP sales on public exchanges did not break securities laws. However, she ruled that direct sales to institutional buyers did.
The court ordered Ripple to pay a $125 million civil penalty and banned it from repeating unregistered institutional sales in the future.
Settlement Attempts and Where the Case Ended
Ripple and the SEC attempted to settle the remaining dispute in 2025. Their proposal would have cut the penalty to $50 million and removed the injunction.
Judge Torres rejected the request. She said a final judgment had already been entered and could not be altered that way. Both sides then dropped their appeals, and the Second Circuit closed the case on August 22, 2025.
The $125 million penalty and the institutional sales injunction remained in place after the case closed.
Ripple’s Expansion Continues
Ripple secured a full Markets in Crypto-Assets license in Luxembourg, allowing it to offer regulated services across the European Economic Area.
That gives the company a clearer operating framework in Europe than it has in the U.S., where rules around digital assets are still being debated in Congress.
The near-shutdown disclosure shows how much the SEC lawsuit shaped Ripple’s direction and finances for several years. The company survived, kept its staff and expanded internationally, but some legal restrictions tied to the final judgment remain active.
