Ripple Nearly Shut Down After SEC Lawsuit Crisis.

• Ripple considered dissolving operations and distributing XRP holdings after the 2020 SEC lawsuit.
• Garlinghouse revealed Ripple spent about $150 million defending against SEC allegations.
• Ripple expanded globally despite legal restrictions and ongoing U.S. regulatory uncertainty.

Ripple CEO Brad Garlinghouse revealed that the company nearly shut down after the U.S. Securities and Exchange Commission filed its lawsuit in 2020, highlighting the severe pressure created by the legal battle.

The company considered distributing its XRP holdings to shareholders before deciding to continue fighting the SEC case despite major financial and operational challenges.

Ripple Considered Closing Operations After SEC Lawsuit

Ripple faced significant uncertainty after the SEC filed its lawsuit against the company in December 2020 over alleged unregistered XRP sales.

Garlinghouse said he and co-founder Chris Larsen discussed dissolving Ripple and distributing the company’s XRP holdings to shareholders on a pro rata basis.

The CEO described the option as a simpler path because the SEC had extensive resources and legal power.

However, Ripple rejected the shutdown plan because closing the company would have resulted in hundreds of employees losing their jobs.

Garlinghouse explained that continuing the legal fight was a difficult decision because the outcome remained uncertain during the lawsuit’s early stages.

Even so, Ripple chose to defend itself rather than end operations and abandon its long-term business strategy.

The CEO shared the comments during a discussion at the University of Kansas School of Business, where he reflected on the company’s response to the lawsuit.

Ripple CEO Says Company Considered Shutting Down After 2020 SEC Lawsuit

Ripple CEO Brad Garlinghouse said the company seriously considered shutting down after the U.S. SEC sued it in 2020. He said Ripple could have distributed its XRP holdings to shareholders and told the SEC it… pic.twitter.com/8xuSRIwdyI

— Wu Blockchain (@WuBlockchain) July 12, 2026

The remarks were later highlighted by Wu Blockchain on July 12, bringing renewed attention to Ripple’s internal challenges during the dispute.

Garlinghouse also revealed that Ripple spent approximately $150 million on legal costs while challenging the SEC’s allegations.

The SEC claimed Ripple conducted unregistered securities sales through XRP and alleged that the company raised more than $1.3 billion.

Ripple Expands Globally Despite Remaining Legal Restrictions

The SEC lawsuit placed pressure on Ripple’s partnerships, institutional relationships, and business operations for several years.

Garlinghouse said he previously met SEC officials four times between 2017 and 2019 without a lawyer present during those discussions. He stated that officials never informed him that XRP could later be considered a security, influencing Ripple’s decision to challenge the lawsuit.

In July 2023, Judge Analisa Torres issued a split ruling regarding Ripple’s XRP transactions.

The court determined that Ripple’s programmatic XRP sales on public exchanges did not qualify as securities transactions.

However, the judge ruled that certain direct XRP sales to institutional buyers violated securities laws.

The court later ordered Ripple to pay a $125 million civil penalty while restricting future institutional XRP sales.

Ripple and the SEC attempted to resolve remaining issues in 2025, but the court rejected their settlement proposal.

Both sides eventually withdrew their appeals, leaving the original judgment and restrictions unchanged.

Despite the legal outcome, Ripple continued expanding beyond the United States and strengthening its international presence. The company secured a full Markets in Crypto-Assets license in Luxembourg, allowing it to provide regulated crypto services across the European Economic Area.

The approval provided Ripple with a clearer regulatory framework in Europe as U.S. lawmakers continued debating cryptocurrency market structure rules.

Although the lawsuit ended, the case continues shaping Ripple’s operations and influencing broader discussions about digital asset regulations. Garlinghouse’s disclosure shows how regulatory uncertainty affected Ripple’s strategy, but the company maintained operations and continued pursuing global growth.