What to know:
- Ripple CEO stated that Ripple almost closed after being sued by the SEC in December 2020.
- Ripple considered distributing the token to the holders to avoid the loss of hundreds of jobs.
- Decision of Judge Analisa Torres in 2023 declared transactions of XRP a non-security and helped Ripple in regulatory recovery.
Ripple CEO Brad Garlinghouse revealed that the company seriously considered shutting down after the U.S. Securities and Exchange Commission (SEC) sued Ripple in December 2020.
Speaking at the KU School of Business, Brad Garlinghouse said the lawsuit compelled the company to consider whether it was worth continuing its operations amid the costs and difficulties that were involved in fighting against a federal regulator.
According to the Ripple CEO, Ripple considered the possibility of shutting down its operations by distributing the XRP holdings to its shareholders on a pro-rata basis and informing the SEC that it had ceased to hold the XRP token. He admitted that this decision would have settled the dispute faster, but it would have led to hundreds of people losing their jobs.
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Ripple CEO Details Decision to Fight SEC Lawsuit
As per Brad Garlinghouse, Ripple CEO, Ripple decided to challenge the claims made by the SEC due to the fact that it possessed “infinite power and resources”. He stated that while challenging was tough, the worst result for Ripple would be folding its business. The lawsuit claimed that Ripple offered securities in the form of XRP tokens.
Legal dispute became one of the most closely-watched enforcement cases in the cryptocurrency space. The SEC also sued Garlinghouse and Ripple co-founder Chris Larsen individually. In 2023, Judge Analisa Torres ruled that transactions of XRP were non-security transactions, which was regarded as a very important decision for the digital assets market.
Industry Impact and Ripple’s Recovery
The case changed the discourse around regulations in the entire cryptocurrency industry, as many companies based on blockchain technology followed the court proceedings with interest. Legal professionals often use the case as an important precedent, helping to understand how to differentiate between digital assets themselves and the way in which they are being traded.
After many years of the lawsuit, Ripple has increased its reach when it comes to regulation and has been working on payments and blockchain development. According to the representatives of the XRP community, such as BankXRP, Ripple has been recovering due to its increased business activity in the United States, as well as its licenses and collaborations in different jurisdictions, including Europe, according to MiCA.
Ripple CEO’s comments offer new insight into one of the most challenging periods in Ripple’s history. It is possible to notice that in this case, the enforcement of regulations significantly impacted the business decisions of the company, employment, and investments within the digital asset industry.
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