Ripple once weighed shutting down rather than fighting the U.S. Securities and Exchange Commission, CEO Brad Garlinghouse said. He described the decision he and co-founder Chris Larsen made after the agency sued the company in 2020.
Speaking at the University of Kansas School of Business earlier this week, Garlinghouse said they seriously considered winding Ripple down and distributing its XRP holdings to shareholders. He called that the easier path, facing a government with what he described as “infinite power and resources.”
Ripple holds a large amount of XRP. Garlinghouse said the company could have handed it to shareholders on a pro rata basis and dissolved. That would have effectively ended 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
The SEC sued Ripple in 2020, alleging it sold XRP as an unregistered security. The lawsuit also named Garlinghouse and Larsen personally. Garlinghouse said he met agency officials four times between 2017 and 2019 without a lawyer. He was never told XRP might be treated as a security, which shaped his belief 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. That happened after the Trump administration installed new SEC leadership that has taken a more accommodating approach to crypto.
What this means
This near-shutdown moment reveals how close Ripple came to a different outcome. It also highlights the uncertainty crypto companies faced under the SEC under former chair Gary Gensler. Many firms argued the agency was regulating by enforcement rather than clear rules. Garlinghouse’s comments offer a behind-the-scenes look at the pressure Ripple felt and the human cost of the legal fight.
Ripple survived and continues to operate. But the decision to fight rather than fold was not an easy one, according to Garlinghouse. It may have set a precedent for other companies deciding how to handle SEC enforcement.
