Ripple CEO Brad Garlinghouse revealed that the company came close to shutting down rather than fighting the U.S. Securities and Exchange Commission (SEC) after the agency sued the firm in 2020. Speaking at the University of Kansas School of Business, Garlinghouse said he and co-founder Chris Larsen considered dissolving Ripple and distributing its XRP holdings to shareholders to end the case. The revelation highlights how close the company was to collapse during the legal battle.
The Decision to Fight or Fold
Garlinghouse described the choice as a difficult one, noting that the government had "infinite power and resources," making a legal fight seem almost impossible. The alternative was straightforward: Ripple held a large amount of XRP, and the founders could have distributed it to shareholders on a pro rata basis, effectively dissolving the company and ending the lawsuit. He admitted that shutting down would have been the easier path, though a bad one, as it would have cost hundreds of jobs.
Ultimately, Garlinghouse and Larsen decided to fight. "I'm glad in retrospect, but that was not obvious at the time," he said. The pressure was deeply personal, as Garlinghouse met SEC officials four times between 2017 and 2019 without a lawyer and was never told XRP might be treated as a security. This lack of clear rules shaped his view that the SEC's action was unfair.
The Legal Advice and Personal Charges
Ripple CTO Emeritus David Schwartz confirmed that the threat of collapse was real, driven by bleak legal advice. He said the company's lawyers called Ripple unsavable and urged leaders to cut a quick deal. Schwartz also suggested the SEC named Garlinghouse and Larsen personally to break their resolve, calling it an expected maneuver to force a rapid settlement. He floated a controversial theory that competing crypto projects may have influenced the enforcement action, though he stressed this was speculation without firm evidence.
The Outcome
The fight ultimately paid off for Ripple. Judge Analisa Torres ruled that XRP itself is not a security, and both sides settled in May last year after new SEC leadership under the Trump administration adopted a more accommodating approach to crypto. Garlinghouse's comments offer a rare inside look at the existential crisis the company faced during one of the crypto industry's most high-profile legal battles.