In a striking revelation, Ripple CEO Brad Garlinghouse disclosed that the company came perilously close to shutting down following the lawsuit filed by the U.S. Securities and Exchange Commission (SEC) in December 2020. Speaking at an event hosted by the University of Kansas School of Business, Garlinghouse recounted discussions with co-founder Chris Larsen about the possibility of dissolving the company and distributing its XRP holdings to shareholders.
Garlinghouse described the SEC as wielding “infinite power and resources,” making the decision to fight back seem daunting. Ultimately, the choice not to dissolve the company was driven by the desire to protect hundreds of jobs. Reflecting on the moment, he remarked, “I’m glad in retrospect, but that was not obvious at the time.” This candid admission has reignited interest in the tumultuous period Ripple endured after the lawsuit.
The SEC Lawsuit and Its Implications
The SEC accused Ripple, along with Garlinghouse and Larsen, of conducting unregistered securities sales through XRP, alleging that the firm had raised over $1.3 billion through these sales. During his tenure, Garlinghouse recounted meeting with SEC officials four times between 2017 and 2019 without legal representation, and he was never informed that XRP could be classified as a security. This experience played a significant role in his decision to contest the lawsuit.
Over the course of four years, Ripple expended approximately $150 million in legal fees fighting the SEC, an endeavor that strained its partnerships and operations within the U.S. market.
In July 2023, a pivotal ruling was delivered by Judge Analisa Torres, who found that XRP sales on public exchanges did not violate securities laws. However, she ruled that direct sales to institutional buyers did, resulting in a $125 million civil penalty and a prohibition on future unregistered institutional sales.
Attempts at Settlement and Case Closure
Efforts for a settlement between Ripple and the SEC were made in 2025, with a proposal to reduce the penalty to $50 million and eliminate the injunction. However, Judge Torres rejected this request, stating that a final judgment had already been established and could not be altered. Subsequently, both parties dropped their appeals, leading to the conclusion of the case on August 22, 2025, while the $125 million penalty and restrictions on institutional sales remained in effect.
Ripple’s Resilience and Future Prospects
Despite the trials faced, Ripple has continued to expand its operations. Recently, the company secured a comprehensive Markets in Crypto-Assets license in Luxembourg, enabling it to provide regulated services across the European Economic Area. This development presents Ripple with a more structured operational environment in Europe, contrasting sharply with the ongoing regulatory uncertainties in the U.S.
The near-collapse narrative underscores the profound impact the SEC lawsuit had on Ripple’s trajectory and financial standing over the years. Ultimately, the company not only survived but also retained its workforce and pursued growth on an international scale, even as it navigates ongoing legal restrictions stemming from the final judgment.
