Ripple Nearly Shut Down After SEC Lawsuit, CEO Recounts

Brad Garlinghouse recalled that the Securities and Exchange Commission’s 2020 enforcement action nearly led Ripple to wind down operations. He and co‑founder Chris Larsen considered dissolving the company and distributing Ripple’s XRP holdings to shareholders on a pro rata basis.

They ultimately chose to continue operating and contest the case in court to preserve hundreds of jobs. Garlinghouse estimated the legal battle lasted about four years and cost roughly $150 million.

Garlinghouse recalled, “We almost decided to shut down the company when the SEC sued us.” He added that company leaders felt they were facing an agency with extensive resources.

In August 2025 the SEC dismissed appeals that had kept parts of the case active. The district court’s final judgment remained in effect, including a $125.04 million civil penalty against Ripple and an injunction restricting certain company activities.

Garlinghouse clarified that the deliberations concerned Ripple as a corporate entity. The plan under discussion would have affected only XRP held by the company; the XRP Ledger would have continued to operate and publicly held XRP would not have been transferred or extinguished as part of a corporate wind‑down.

He noted that Ripple’s XRP reserve provided an exit option — a way to return value to shareholders if the company shut down — and did not claim the reserve funded the legal defense.

The account describes the choice facing Ripple’s leadership after the 2020 filing: accept years of litigation and rising legal bills or dissolve the company and distribute its token holdings.