Ripple Almost Shut Down and Distributed XRP After SEC Lawsuit, CEO Reveals

Ripple Considered Closing After SEC Lawsuit Put Company astatine Risk

Ripple CEO Brad Garlinghouse revealed that the institution considered shutting down aft the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple and named him and co-founder Chris Larsen successful 2020 implicit XRP sales. The determination became 1 of the astir hard moments of his leadership, with the institution weighing whether continuing the ineligible combat was worthy the fiscal and operational risks.

Garlinghouse said during a KU Hustle podcast interrogation astatine the University of Kansas School of Business, published connected July 8:

“We astir decided to unopen down the institution erstwhile the SEC sued america … The institution owns a batch of XRP … We could person unopen it down and … conscionable administer the XRP to shareholders connected a pro rata basis.

The SEC suit centered connected the regulator’s assertion that XRP income progressive unregistered securities. Garlinghouse disputed that position, comparing the crypto token much intimately to bitcoin, which helium described arsenic a abstracted integer plus operating connected an unfastened network.

Ripple’s Legal Fight Ended After SEC Appeal Withdrawal and Final Judgment

Garlinghouse said Ripple spent $150 cardinal connected ineligible bills during the four-year quality with the SEC, portion its U.S. concern remained mostly stagnant for astir 5 years aft the suit began. He said the lawsuit created prolonged uncertainty astir Ripple’s quality to run successful the home market.

The ineligible conflict began successful 2020 erstwhile the SEC alleged Ripple sold $1.3 cardinal of XRP arsenic an unregistered security. In 2023, U.S. District Judge Analisa Torres issued a mixed ruling, uncovering that XRP income connected nationalist exchanges were not securities transactions, portion income to organization investors were treated otherwise nether securities law.

Ripple was aboriginal ordered to wage a $125 cardinal civilian punishment and judge an injunction related to securities instrumentality compliance. Both Ripple and the SEC filed appeals challenging antithetic aspects of the ruling earlier agreeing to disregard those filings. The lawsuit formally concluded successful August 2025 aft the appeals were withdrawn and the tribunal process ended.

The regulatory situation surrounding cryptocurrency besides changed aft SEC enactment shifted nether Chairman Paul Atkins and the Trump administration. The bureau moved distant from a much assertive regulation-by-enforcement attack toward deregulation, greater engagement with the crypto industry, and a absorption connected accepted fraud cases alternatively than wide firm penalties.

Garlinghouse said that earlier the SEC filed its lawsuit, helium met with SEC officials 4 times betwixt 2017 and 2019 to explicate however Ripple utilized blockchain exertion and XRP successful its outgo system. He said regulators did not bespeak during those meetings that XRP could beryllium considered a security.

Ripple Continued Operations After Weighing Shutdown Option

The Ripple main enforcement described however the institution could person responded to the SEC lawsuit, outlining a script successful which Ripple mightiness person exited the quality by distributing its XRP holdings and dissolving the company.

“You guys deliberation these are securities. Ripple doesn’t ain it anymore. Ripple’s gone now,” helium said, describing a hypothetical script alternatively than an enactment the institution took, outlining however Ripple could person responded to the SEC.

He added that specified a determination would person travel astatine a precocious outgo to employees and the company’s future, stating:

“Hundreds of radical would person mislaid their jobs. I deliberation that was a atrocious outcome, but successful immoderate ways it was the easier outcome.”

After deciding not to unopen down, Garlinghouse said the prime to proceed operating was not wide astatine the time. “That was a hard decision, and evidently I’m gladsome successful retrospect, but that was not evident astatine the time,” helium stated. Ripple chose to proceed operating aft weighing the interaction connected employees and the business.