Ripple CEO Brad Garlinghouse has revealed the company nearly shut down after the U.S. Securities and Exchange Commission (SEC) sued it in December 2020. The firm considered distributing its XRP holdings to shareholders and informing regulators it had ceased to hold the token. Garlinghouse said this would have settled the dispute faster but would have cost hundreds of jobs. A key ruling by Judge Analisa Torres in 2023, which declared XRP transactions a non-security, helped Ripple recover and refocus on regulatory compliance and global expansion.
Ripple CEO Brad Garlinghouse stated that the company almost closed after being sued by the U.S. Securities and Exchange Commission (SEC) in December 2020.
Speaking at the KU School of Business, Garlinghouse said the lawsuit forced the company to question whether continuing operations was viable. “The lawsuit compelled the company to consider whether it was worth continuing its operations” amid the costs of fighting a federal regulator.
Ripple considered distributing the XRP token to its shareholders on a pro-rata basis. “This decision would have settled the dispute faster, but it would have led to hundreds of people losing their jobs,” the CEO explained.
The company decided to challenge the SEC’s claims because it possessed “infinite power and resources.” Garlinghouse stated that while challenging was tough, the worst result for Ripple would be folding its business.
The lawsuit, which also named Garlinghouse and co-founder Chris Larsen individually, became one of the most closely-watched enforcement cases in crypto. In 2023, Judge Analisa Torres ruled that XRP transactions were non-security transactions.
That decision was regarded as a very important precedent for the digital assets market. The case changed regulatory discourse across the entire cryptocurrency industry, with many blockchain companies following the proceedings.
After years of litigation, Ripple has increased its regulatory reach and is working on payments and blockchain development. According to community representatives such as BankXRP, Ripple has been recovering due to increased business activity in the United States, as well as licenses and collaborations in Europe under MiCA.
Garlinghouse’s comments offer new insight into one of the most challenging periods in Ripple’s history. The enforcement of regulations significantly impacted the company’s business decisions, employment, and investments within the digital asset industry.
