Ripple CEO reveals that the company was on the verge of bankruptcy after the SEC action in 2020

Core Points

After the SEC filed a lawsuit in 2020, Ripple CEO Brad Garlinhaus and co-founder Chris Larson seriously considered dissolving the company. The leadership once planned to distribute the company's XRP to shareholders in a pro rata manner, but eventually abandoned the plan. The four-year legal battle cost Ripple approximately $150 million. In 2023, Judge Analisa Torres ruled that XRPs traded on the open market are not securities. Currently, the company still has to pay a $125 million fine and is restricted from selling XRP to institutional investors.

Ripple CEO: After the SEC lawsuit in 2020, the company considered shutting down

Ripple CEO Brad Garlinhaus revealed at a recent public event that after the US Securities and Exchange Commission filed a lawsuit in December 2020, he and company co-founder Chris Larson almost decided to dissolve the entire organization. In a speech at the University of Kansas Business School, Garinhaus said the two had extensive discussions about terminating business operations and distributing Ripple's XRP to shareholders based on their shareholding. He said the plan was simpler at the time, especially given the SEC's vast power and financial resources.

However, executives eventually abandoned the plan because implementing it would cost hundreds of employees their jobs. Galinhaus acknowledges that in times of uncertainty, choosing to respond is by no means a clear decision. "Looking back now, I am very glad that we chose to fight, but there was no such clear judgment at the time." he said. These remarks were made public through Wu Blockchain on July 12, triggering renewed attention to Ripple's internal discussions in the early stages of the lawsuit.

Understand the SEC case and its financial implications

The U.S. Securities and Exchange Commission accuses Ripple and its executives Garlinhaus and Larson of making an unregistered securities issuance through XRP transactions. According to regulators, Ripple earned more than $1.3 billion in revenue through these alleged violations. Garlinhouse recalled that he met with SEC representatives four times between 2017 and 2019. He emphasized that legal advisers were never present at these meetings and that officials never hinted that XRP might be classified as securities. This history influenced his determination to challenge the charges through court.

Over the entire four-year litigation period, the company invested approximately $150 million in legal fees. The case created a significant obstacle to Ripple's partnership in the United States, limited the participation of institutional clients, and complicated day-to-day business operations. In July 2023, Judge Analisa Torres issued a step-by-step ruling. She determined that XRP transactions through public cryptocurrency exchanges did not violate securities regulations. Instead, she ruled that selling XRP directly to institutional buyers constituted a violation. The court imposed a civil fine on Ripple of $125 million and prohibited the company from making future unregistered institutional sales.

Settlement negotiations and final results

In 2025, Ripple and the SEC seek to reach a settlement agreement to resolve remaining issues. The two sides jointly proposed reducing the fine to $50 million and lifting the ban on institutional sales. But Judge Torres refused to grant the settlement request. She determined that the final judgment had officially taken effect and could not be revised through this process. Subsequently, both parties withdrew their appeals and the Second Circuit Court of Appeals formally closed the case on August 22, 2025. After the case was closed, the $125 million fine and the ban on institutional sales without registration remained in effect.

International growth strategy continues to advance

Ripple has received comprehensive crypto asset markets regulation approval in Luxembourg, allowing it to provide compliance services in the European Economic Area. The authorization creates a clearer regulatory environment for Ripple's operations in Europe than in the United States, where comprehensive digital asset legislation is still before Congress. The disclosure that the company nearly closed demonstrates the profound impact of the SEC lawsuit on Ripple's strategic direction and financial situation over the years. Although the company has withstood the test, retained its workforce and promoted international expansion, certain legal restrictions in the final ruling are still affecting its operations.