Ripple was mere weeks away from shutting down entirely following the U.S. Securities and Exchange Commission’s (SEC) December 2020 lawsuit, CEO Brad Garlinghouse revealed in a recent interview on the KU Hustle podcast at the University of Kansas School of Business, published July 8.
The disclosure reframes the high-profile SEC vs. Ripple legal battle not merely as a regulatory dispute over whether XRP qualifies as a security, but as an existential crisis that nearly erased Ripple—the primary institutional backer of the XRP token—from the cryptocurrency landscape.
Garlinghouse detailed internal deliberations at Ripple during the lawsuit’s early days, explaining that one serious option under consideration was to distribute the company’s substantial XRP reserves to shareholders on a pro rata basis and cease operations entirely.
“We almost decided to shut down the company when the SEC sued us,” Garlinghouse said. “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.” He added bluntly: “You guys think these are securities. Ripple doesn’t own it anymore. Ripple’s gone now.”
Such a move would have left XRP without its main corporate steward, institutional sales infrastructure, or development funding—fundamentally altering the token’s market structure. While acknowledging the logic behind dissolution, Garlinghouse noted the human cost: “Hundreds of people would have lost their jobs. I think that was a bad outcome, but in some ways it was the easier outcome.”
Instead, Ripple chose to fight—a decision Garlinghouse described as far from obvious at the time: “That was a difficult decision, and obviously I’m glad in retrospect, but that was not obvious at the time.”
The cost of resistance was steep: Ripple spent approximately $150 million in legal fees over four years, and its U.S. business remained largely frozen for about five years after the lawsuit began. The SEC’s complaint alleged Ripple raised $1.3 billion through unregistered sales of XRP, triggering an immediate market crash—XRP plummeted roughly 60% within a week, and major exchanges suspended or delisted trading.
Garlinghouse also revealed he had met with SEC officials four times between 2017 and 2019 to explain Ripple’s use of XRP in its blockchain-based payment system, with regulators never signaling that XRP might be deemed a security.
A turning point came in July 2023, when U.S. District Judge Analisa Torres issued a landmark split ruling: XRP is not a security when sold on public exchanges, though institutional sales may fall under securities law. This distinction set a critical precedent for token classification across the industry.
Ripple ultimately agreed to pay a $125 million civil penalty—far less than the $2 billion initially sought by the SEC. Both parties filed appeals but later agreed to dismiss them, formally concluding the case in August 2025.
The resolution coincided with a broader shift in U.S. crypto regulation under SEC Chairman Paul Atkins and the Trump administration, which moved away from “regulation by enforcement” toward clearer engagement and a focus on fraud rather than sweeping penalties. Garlinghouse has since praised this new regulatory direction.
With the legal overhang lifted and the U.S. injunction vacated, Ripple is now refocusing on global payments. For XRP holders, the survival of Ripple directly underpins the token’s current legal clarity and price performance—including a roughly 400% surge from November 2024 through early 2026.
As of this week, XRP trades at $1.08, down 1.3% in the past 24 hours, with over $828 million in daily trading volume. Meanwhile, Ripple-related ETFs recorded modest inflows of $107,000 last week, bringing total inflows to $1.4 billion since their November 2025 launch, according to CoinGlass data.