Ripple CEO Brad Garlinghouse said the company came close to shutting down after the U.S. Securities and Exchange Commission sued it. Speaking recently at the University of Kansas School of Business, he described the opening phase of the case as a period of deep uncertainty, with legal advisers reportedly urging the company to surrender quickly instead of fighting the government’s claims in court.
Garlinghouse said Ripple’s leadership, including co-founder Chris Larsen, discussed whether the company should be dissolved altogether. According to his account, he and Larsen considered a path that would have distributed XRP to shareholders on a pro rata basis and ended operations completely. He said that option was seriously weighed as an alternative to a drawn-out legal battle.
Ripple executives considered closure during the early SEC fight
In his remarks, Garlinghouse said Ripple “almost decided” to shut down when the SEC filed suit. He framed the moment as a confrontation with a government agency that had vast power and resources, leaving management to decide what response made the most sense. He added that closing the company would have been the easier and more predictable move, even if it would have come at the expense of Ripple’s broader mission and its team.
Those comments add detail to the pressure Ripple says it faced in late 2020 and early 2021. The company ultimately stayed operational and chose to contest the lawsuit, but its leadership maintains that survival was far from assured at the time.
David Schwartz says early legal advice was extremely bleak
David Schwartz, who helped design Ripple’s blockchain technology, gave a similar picture of the company’s legal position at the start of the case. He said lawyers advised that Ripple was effectively finished and could not be saved, pushing executives to make a deal quickly and protect themselves personally rather than try to preserve the business.
Schwartz also suggested the SEC’s approach may have been aimed at individuals as well as the company. In his view, naming Brad Garlinghouse and Chris Larsen as defendants may have been intended to increase pressure for a settlement. That would have raised the stakes beyond corporate reputation, putting personal legal risk on top of the case against Ripple itself.
Debate over regulatory motives has resurfaced
The disclosure that Ripple nearly dissolved has revived debate over why the SEC took such an aggressive line. Schwartz added another layer by speculating that rival crypto projects may have had some influence on the regulatory action against Ripple, while also saying he had no concrete evidence for that claim.
Referencing long-running allegations often described as “ETHGate,” Schwartz said it was plausible that competing blockchain projects were involved through advocacy or behind-the-scenes efforts, though he acknowledged the evidence remains limited. The report also notes that the SEC has brought numerous enforcement actions across the crypto sector in recent years. As the U.S. agency responsible for regulating securities markets, enforcing securities law, and protecting investors, its actions continue to draw close scrutiny from the industry.