Ripple CEO Brad Garlinghouse revealed that the company seriously considered shutting down after the U.S. Securities and Exchange Commission filed a lawsuit in December 2020. In a talk at the University of Kansas School of Business, Garlinghouse said he and co-founder Chris Larsen discussed distributing Ripple’s XRP holdings to shareholders on a pro rata basis and dissolving the business. He described that option as the easier path against an agency with “infinite power and resources,” but the company ultimately chose to fight the case to protect hundreds of jobs.
The cost of fighting the SEC
Garlinghouse estimated that Ripple spent about $150 million on the legal battle. He said the company rejected the shutdown plan because it would have ended hundreds of jobs. “I’m glad in retrospect, but that was not obvious at the time,” he said. A Wu Blockchain post shared the remarks on July 12, bringing renewed attention to Ripple’s internal response during the lawsuit’s earliest months.
The SEC accused Ripple, Garlinghouse and Larsen of conducting unregistered securities sales through XRP, alleging the company raised more than $1.3 billion. Garlinghouse also said he met SEC officials four times between 2017 and 2019 without a lawyer, and officials never warned him that XRP could be treated as a security. That lack of clarity influenced Ripple’s decision to challenge the case.
A split ruling and final judgment
Judge Analisa Torres issued a split ruling in July 2023. She found that Ripple’s programmatic XRP sales on public exchanges did not amount to securities transactions, but some direct sales to institutional buyers broke securities laws. The court later ordered Ripple to pay a $125 million civil penalty and barred it from repeating unregistered institutional sales.
Ripple and the SEC tried to settle the remaining dispute in 2025, proposing to reduce the penalty to $50 million and remove the injunction. Judge Torres rejected the request because the court had already entered a final judgment. Both sides then dropped their appeals, and the Second Circuit closed the case on August 22, 2025. However, the original judgment remains in force, including the $125 million penalty and the permanent injunction tied to future institutional XRP sales.
Ripple expands abroad amid U.S. uncertainty
Ripple continued to expand after the lawsuit. The company secured a full Markets in Crypto-Assets license in Luxembourg, allowing it to offer regulated crypto services across the European Economic Area. That gives Ripple a clearer operating framework in Europe than it currently has in the United States. U.S. lawmakers continue to debate market structure rules that could define when digital assets fall under securities or commodities oversight. For Ripple, the near-shutdown disclosure shows how enforcement pressure shaped its strategy and spending for several years.