Ripple weighed shutdown over SEC case before fighting to keep XRP operations alive
Facing a U.S. regulatory lawsuit in 2020, Ripple considered closing the company and distributing its XRP holdings to shareholders instead of entering a prolonged legal battle. Chief Executive Brad Garlinghouse says the company ultimately chose to fight because a shutdown would have eliminated hundreds of jobs and reshaped its future in crypto markets.
Highlights
- Ripple considered winding down and distributing XRP holdings to shareholders after the SEC sued it in 2020 but chose to fight, incurring $150 million in legal fees.
- Judge Analisa Torres ruled that XRP itself is not a security, marking a favorable legal outcome for Ripple.
- The case settlement in May last year under new SEC leadership signals a more accommodating U.S. regulatory stance toward the digital asset sector.
Decision after the 2020 SEC lawsuit
As reported by CoinDesk, Garlinghouse said he and Ripple co-founder Chris Larsen seriously examined whether to wind down the company after the U.S. Securities and Exchange Commission sued Ripple in 2020, alleging XRP had been sold as an unregistered security.Speaking earlier this week at the University of Kansas School of Business, Garlinghouse says Ripple could have distributed its XRP holdings to shareholders on a pro rata basis and dissolved the company. He describes that route as the easier option when facing a regulator with what he called "infinite power and resources."
Instead, Ripple chose to contest the case. Garlinghouse says that decision helps preserve hundreds of jobs, although the company spends about $150 million on legal fees during the four-year fight.
Legal outcome and crypto sector implications
Garlinghouse says his view of the case is shaped in part by meetings with SEC officials between 2017 and 2019, when he says he met the agency four times without a lawyer and was never told XRP might be treated as a security. That experience reinforces Ripple's argument that the company lacked clear regulatory guidance.Ripple later prevails when Judge Analisa Torres rules that XRP itself is not a security. The dispute is settled in May last year after new SEC leadership under the Trump administration adopts a more accommodating approach toward crypto, marking a significant shift for Ripple and the wider digital asset sector in the U.S.
In our earlier report, Senate Democrats pressed for committee hearings into whether President Donald Trump’s cryptocurrency holdings and related ventures could pose national security risks. We noted that lawmakers pointed to large crypto-linked income disclosures and concerns about foreign or unidentified investors potentially influencing U.S. policy decisions.
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