Ripple CEO Brad Garlinghouse revealed that the company considered shutting down after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple and named him and co-founder Chris Larsen in 2020 over XRP sales. The decision became one of the most difficult moments of his leadership, with the company weighing whether continuing the legal fight was worth the financial and operational risks.

Garlinghouse said during a KU Hustle podcast interview at the University of Kansas School of Business, published on July 8:

“We almost decided to shut down the company when the SEC sued us … The company owns a lot of XRP … We could have shut it down and … just distribute the XRP to shareholders on a pro rata basis.

The SEC lawsuit centered on the regulator’s claim that XRP sales involved unregistered securities. Garlinghouse disputed that position, comparing the crypto token more closely to bitcoin, which he described as a separate digital asset operating on an open network.

Garlinghouse said Ripple spent $150 million on legal bills during the four-year dispute with the SEC, while its U.S. business remained largely stagnant for about five years after the lawsuit began. He said the case created prolonged uncertainty around Ripple’s ability to operate in the domestic market.

The legal battle began in 2020 when the SEC alleged Ripple sold $1.3 billion of XRP as an unregistered security. In 2023, U.S. District Judge Analisa Torres issued a mixed ruling, finding that XRP sales on public exchanges were not securities transactions, while sales to institutional investors were treated differently under securities law.

Ripple was later ordered to pay a $125 million civil penalty and accept an injunction related to securities law compliance. Both Ripple and the SEC filed appeals challenging different aspects of the ruling before agreeing to dismiss those filings. The case formally concluded in August 2025 after the appeals were withdrawn and the court process ended.

The regulatory environment surrounding cryptocurrency also changed after SEC leadership shifted under Chairman Paul Atkins and the Trump administration. The agency moved away from a more aggressive regulation-by-enforcement approach toward deregulation, greater engagement with the crypto industry, and a focus on traditional fraud cases rather than broad corporate penalties.

Garlinghouse said that before the SEC filed its lawsuit, he met with SEC officials four times between 2017 and 2019 to explain how Ripple used blockchain technology and XRP in its payment system. He said regulators did not indicate during those meetings that XRP could be considered a security.

The Ripple chief executive described how the company could have responded to the SEC lawsuit, outlining a scenario in which Ripple might have exited the dispute by distributing its XRP holdings and dissolving the company.

“You guys think these are securities. Ripple doesn’t own it anymore. Ripple’s gone now,” he said, describing a hypothetical scenario rather than an action the company took, outlining how Ripple could have responded to the SEC.

He added that such a move would have come at a high cost to employees and the company’s future, stating:

“Hundreds of people would have lost their jobs. I think that was a bad outcome, but in some ways it was the easier outcome.”

After deciding not to shut down, Garlinghouse said the choice to continue operating was not clear at the time. “That was a difficult decision, and obviously I’m glad in retrospect, but that was not obvious at the time,” he stated. Ripple chose to continue operating after weighing the impact on employees and the business.

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