Ripple weighed shutting down in 2020, spent $150M fighting SEC

Ripple Chief Executive Brad Garlinghouse said he and co-founder Chris Larsen seriously considered winding down the company in 2020 and distributing its XRP to shareholders on a pro rata basis, before choosing to fight the SEC lawsuit instead.

"Shutting down would have cost hundreds of jobs," Garlinghouse said at the University of Kansas School of Business this week. "I'm glad in retrospect, but that was not obvious at the time."

The SEC sued Ripple in December 2020, alleging the company sold XRP as an unregistered security. Garlinghouse said he met SEC officials four times between 2017 and 2019 without a lawyer and was never told XRP might be treated as a security. The legal fight cost Ripple about $150 million over four years, he said.

Ripple ultimately prevailed when Judge Analisa Torres ruled XRP itself is not a security. The case was settled in May last year after a change in SEC leadership under the Trump administration adopted a more accommodating stance toward crypto. The disclosure provides new context on how close the company came to ending — and what that would have meant for XRP holders.

The decision to continue operating rather than dissolve preserved the separation between XRP as a digital asset and Ripple's corporate equity, a distinction that became central to the company's legal defense. At the time of the SEC suit, Ripple owned a significant portion of XRP's total supply, which could have been transferred to equity holders if the company had liquidated.

Garlinghouse described the choice as one between an easier path — handing assets to shareholders and walking away — and a fight against a government with "infinite power and resources." The company chose the latter, preserving hundreds of jobs while spending $150 million in legal fees over four years.

The revelation comes as XRP trades below the $3.00 mark that some market participants had targeted for July, reflecting reduced near-term confidence in the token's price trajectory. The SEC case's resolution removed the most significant regulatory overhang for Ripple, though the company still faces questions about its long-term corporate structure and the ongoing regulatory classification of digital assets in the US. The outcome also contrasts with the SEC's enforcement approach under previous leadership, which pursued actions against Coinbase and Binance for similar alleged securities violations.

This article is for informational purposes only and does not constitute investment advice.