Ripple’s Garlinghouse Reveals XRP Firm Weighed Shutdown Over $150M SEC Fight

XRP News

Ripple CEO Brad Garlinghouse has revealed that the company seriously weighed shutting down in 2020 after the U.S. Securities and Exchange Commission sued it over sales of XRP. Speaking at the University of Kansas School of Business, Garlinghouse said he and co-founder Chris Larsen discussed winding the firm down and distributing its XRP holdings to shareholders pro rata. Halting operations, he noted, would have effectively ended the lawsuit. The plan was abandoned because hundreds of employees depended on the company. Garlinghouse framed the decision to fight as a duty to staff rather than confidence in a courtroom win, a candid admission about how close one of the largest altcoin projects came to folding.

The XRP community marked three years since Judge Analisa Torres issued her landmark summary judgment on July 13, and attention has returned to the holders who helped shape it. CryptoLaw founder John Deaton argued that roughly 4,000 XRP holder affidavits proved decisive in the case. Deaton, who was granted leave to file an amicus brief representing nearly 76,000 holders, said Torres cited both his brief and the affidavits when ruling that XRP itself is not a security. He pointed to those citations as evidence that retail holders, not only Ripple’s lawyers, influenced one of crypto’s most consequential legal outcomes.

A separate debate reignited over how the SEC actually framed its case. Ripple’s former chief technology officer David Schwartz argued that the regulator did not merely target XRP sales but repeatedly characterized the token itself as a security in filings and public statements. Former SEC attorney Marc Fagel pushed back, contending that the legal core of the case rested on whether Ripple sold XRP as a security under Section 5 of the Securities Act. Schwartz countered that this reading narrows the broader language the agency used across the dispute. The distinction matters because it shapes how Torres’s ruling is interpreted today.

The scale of Ripple’s legal defense underscores why the shutdown option was on the table. Garlinghouse said the company absorbed roughly $150 million in legal costs across nearly four years of litigation with the SEC. He stressed that management pressed on without certainty about the outcome, describing the choice as a responsibility to the workforce rather than a calculated bet on victory. For a firm that could have dissolved and returned its XRP to shareholders, the figure illustrates the financial risk Ripple accepted to keep operating and to defend the token’s legal standing in U.S. courts.

At the center of every strand of the story sits Judge Torres’s summary judgment, issued three years ago on July 13. The court held that XRP in itself is not a security and found that Ripple’s programmatic sales through secondary exchanges did not constitute securities transactions. That finding was widely read as a turning point for the wider market, arriving during a prolonged bear market for digital assets. Community figures, including an XRP Ledger Foundation director, have called it the beginning of the end of the SEC’s campaign against crypto. The ruling handed XRP a degree of legal clarity that most tokens still lack.

Yet the victory was not absolute. The same ruling concluded that Ripple’s direct sales of XRP to institutional investors did breach securities laws, leaving part of the dispute for the parties to resolve afterward. This nuance — retail secondary sales cleared, institutional sales not — has fueled ongoing interpretation of what the case truly settled. Garlinghouse’s latest remarks add fresh context, confirming how close the company came to abandoning the fight before that split decision arrived. Together, the accounts show a case that delivered a foundational precedent for XRP while stopping short of fully vindicating every aspect of Ripple’s token distribution.

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