XRP Firm Ripple Nearly Shut Down Over 2020 SEC Lawsuit, CEO Reveals

XRP News

XRP issuer Ripple came within reach of shutting down entirely rather than contesting the U.S. Securities and Exchange Commission, chief executive Brad Garlinghouse disclosed this week. Speaking at the University of Kansas School of Business, he recounted the choice he and co-founder Chris Larsen weighed after the regulator sued the firm in 2020, alleging XRP had been sold as an unregistered security. Garlinghouse said the government appeared to hold “infinite power and resources,” leaving the company’s survival an open question at the time. His account, delivered years after the suit reshaped the altcoin, framed the standoff as the most existential moment in the company’s eight-year history.

The exit ramp, Garlinghouse explained, was strikingly simple. Ripple holds a large treasury of XRP, so the founders could have distributed those tokens to shareholders on a pro rata basis and wound the business down — a maneuver not unlike an airdrop to equity holders. Crucially, dissolving the company would have terminated the SEC case outright, sparing the leadership a years-long courtroom fight against a well-resourced federal agency. Garlinghouse described that route as “the easier outcome,” even as he characterized it as a bad one. The admission underscores how close the payments firm came to abandoning its network rather than defending XRP’s legal status.

What ultimately kept Ripple alive, according to Garlinghouse, was the human cost. Shutting the company would have eliminated the jobs of hundreds of employees, a consequence he and Larsen were unwilling to accept. “I’m glad in retrospect, but that was not obvious at the time,” he said of the decision to litigate. The choice committed Ripple to a multi-year defense that became one of the most closely watched regulatory battles in crypto. For XRP holders, that resolve preserved the asset’s primary corporate backer and the ongoing development of its cross-border settlement rails.

Garlinghouse also detailed how personal the pressure became before the suit even landed. He said he met with SEC officials four times between 2017 and 2019 — each time without a lawyer present — and was never warned that XRP might be treated as a security. That absence of guidance, he argued, left Ripple operating without clear rules of the road. The recollection reinforces a long-standing industry grievance about regulation-by-enforcement, in which firms learn the boundaries of the law only after being sued. It is a theme that has shadowed XRP’s trajectory since the case began.

Ripple’s CTO Emeritus, David Schwartz, corroborated that the collapse threat was genuine rather than rhetorical. He said the danger stemmed from the bleak legal advice leadership received in the lawsuit’s opening weeks. Schwartz further contended that the SEC’s decision to name Garlinghouse and Larsen personally was a deliberate tactic designed to weaken their resolve and pressure a quick capitulation. That framing casts the individual charges not as incidental but as strategic leverage. For observers tracking XRP’s regulatory saga, Schwartz’s comments lend weight to Garlinghouse’s claim that dissolution was, at one point, the path of least resistance.

The revelations did not go unchallenged. Some observers publicly questioned whether a company valued in the billions could realistically have unraveled so quickly, arguing that Ripple’s balance sheet and XRP holdings made an abrupt shutdown implausible. Schwartz pushed back on that skepticism, maintaining that the early legal outlook was dire enough to make winding down a serious boardroom option. The exchange highlights how differently insiders and outsiders read the same crisis. For XRP, the takeaway is that the token’s survival as an actively supported network hinged on a decision that its own leadership now concedes was far from certain.

On COINOTAG’s proprietary 42-indicator composite S/R scoring engine, XRP trades near $1.10 as of publication, with our model rating the $1.1187 resistance a maximum 100/100, driven by the confluence of the Ichimoku Kijun, R1 pivot and EMA 20; the $1.0701 support scores 88/100 on the Swing Low and ATR Lower band. Derivatives data shows a mildly positive 0.0027% funding rate and $642.7 million in open interest, while a 3.31 long/short account ratio — 76.8% long — signals crowded bullish positioning that risks a squeeze. With the Fear & Greed Index at 26 (Fear), an RSI of 44.97 and a bullish MACD against a broader downtrend, a reclaim of $1.1187 opens $1.1475; a loss of $1.0701 invalidates the recovery thesis.