Ripple weighed shutting down after the SEC sued in 2020
Ripple CEO Brad Garlinghouse said the company at one point seriously considered liquidation after the U.S. Securities and Exchange Commission sued Ripple in 2020, including a plan to distribute all of its XRP holdings to shareholders and close the company.
Speaking at the University of Kansas School of Business, Garlinghouse said he and Ripple co-founder Chris Larsen discussed that option at the time. He described the SEC fight as a confrontation with a state machine that had “infinite power and resources,” and said simply turning off the lights looked like the easier way out.
Because Ripple held a large amount of XRP, he said the company could have allocated those assets to shareholders based on their ownership stakes and then dissolved the business. If Ripple had ceased operations, the lawsuit would have come to an end as well.
The company decided to keep fighting
Garlinghouse said he and Larsen ultimately chose to continue the fight with the SEC for a simple reason: shutting the company down would have cost hundreds of employees their jobs.
“Looking back, I’m glad we made it through, but in that fog of war, it was not an easy decision,” he said.
Garlinghouse says Ripple lacked clear guidance
The SEC sued Ripple in 2020, alleging that the company illegally sold XRP as an unregistered security. The agency also named Garlinghouse and Larsen as co-defendants.
Garlinghouse said he met SEC officials four times between 2017 and 2019 without a lawyer present and was never told that XRP could be treated as a security. That experience left him believing Ripple was sued without clear and consistent regulatory guidance.
Legal battle lasted four years and cost $150 million
Garlinghouse said Ripple spent a total of $150 million on legal fees during the four-year court fight.
The case later turned in Ripple’s favor when Judge Analisa Torres ruled that XRP itself is not a security. The decision has been treated as one of the most representative rulings in the history of U.S. crypto regulation and as a major win for Ripple.
Later, after the Trump administration took office and appointed a new SEC chair seen as more friendly toward crypto, the two sides reached a settlement in May last year, bringing the case to a close.