Ripple nearly shut down after SEC lawsuit, CEO reveals

Ripple CEO Brad Garlinghouse said the company seriously considered closing after the U.S. Securities and Exchange Commission sued it in December 2020. He said he and co-founder Chris Larsen discussed distributing Ripple’s XRP holdings to shareholders on a pro rata basis and dissolving the business. Garlinghouse described that choice as the easier path against an agency with “infinite power and resources.”

The company rejected the shutdown plan because it would have ended hundreds of jobs. Garlinghouse said Ripple chose to defend itself even though the result remained uncertain. “I’m glad in retrospect, but that was not obvious at the time,” he said during a talk at the University of Kansas School of Business. He estimated that Ripple spent about $150 million on the legal fight. A Wu Blockchain post shared the remarks on July 12, bringing new attention to Ripple’s internal response during the lawsuit’s earliest months.

The case changed how Ripple could sell XRP

The SEC accused Ripple, Garlinghouse and Larsen of conducting unregistered securities sales through XRP. The agency said Ripple had raised more than $1.3 billion. The lawsuit placed pressure on the company’s U.S. business, partnerships and access to institutional clients. It also created years of uncertainty over how federal securities law applied to XRP transactions.

Garlinghouse also said he met SEC officials four times between 2017 and 2019 without a lawyer. He said officials never warned him that XRP could be treated as a security, which affected Ripple’s decision to challenge the case. Judge Analisa Torres issued a split ruling in July 2023. She found that Ripple’s programmatic XRP sales on public exchanges did not amount to securities transactions. However, she ruled that some direct sales to institutional buyers broke securities laws. The court later ordered Ripple to pay a $125 million civil penalty and barred it from repeating unregistered institutional sales.

Appeals ended, but the final judgment remained

Ripple and the SEC tried to settle the remaining dispute in 2025. Their proposal would have reduced the penalty to $50 million and removed the injunction. Judge Torres rejected the request because the court had already entered a final judgment. Both sides then dropped their appeals, and the Second Circuit closed the case on August 22, 2025.

A crypto.news review of the case said the end of the appeals did not erase the original judgment. Ripple still faced the $125 million penalty and the permanent injunction tied to future institutional XRP sales. Exchange-based XRP trading received clearer treatment under the 2023 ruling, but the decision did not create a single federal rule for every digital asset transaction.

Ripple expands while U.S. rules remain unfinished

Ripple continued to expand after the lawsuit. Recent crypto.news coverage reported that the company secured a full Markets in Crypto-Assets license in Luxembourg. The approval allows Ripple to offer regulated crypto services across the European Economic Area. That gives the company a clearer operating framework in Europe than it currently has in the United States. Crypto.news also reported that Ripple’s European approval arrived as U.S. legal clarity remained tied to federal legislation and the treatment of digital assets.

U.S. lawmakers continue to debate market structure rules that could define when digital assets fall under securities or commodities oversight. For Ripple, the near-shutdown disclosure shows how enforcement pressure shaped its strategy and spending for several years. The company survived the case, kept its workforce and expanded abroad, while some limits from the final judgment remain active.