Ripple Considered Shutting Down During SEC Case to Distribute XRP
Garlinghouse says Ripple even considered dissolving the company in 2020 after the SEC challenged XRP sales as an unregistered security. The case became a key moment for token classification and oversight in the U.S.
Key Takeaways
- In 2020, Ripple weighed a full shutdown and a pro rata XRP distribution to shareholders as a way to end the SEC case.
- The company eventually chose to fight, partly to protect hundreds of jobs, after the SEC sued Ripple and top executives in December 2020.
- The case cost Ripple about $150 million; in 2025, Ripple and the SEC dropped their appeals, leaving a $125 million fine in place.
Ripple came close to shutting down entirely in 2020 rather than taking on the lawsuit from the U.S. regulator, the SEC. CEO Brad Garlinghouse said he and cofounder Chris Larsen even discussed dissolving the company and distributing XRP holdings pro rata to shareholders.
Shutdown as an Exit
Garlinghouse said that, compared with what he described as an opponent with “infinite power and resources,” this looked like the simplest way out. In his telling, Ripple could have handed its XRP holdings to shareholders and effectively wound down the business, which would have ended the case as well.
That option came up after the SEC sued Ripple in December 2020 over the sale of more than $1.3 billion (€1.1 billion) worth of XRP tokens as an alleged unregistered security. The regulator also named Garlinghouse and Larsen personally in the complaint.
Why Ripple Kept Fighting
Ripple ultimately decided to fight in court, in part because shutting down would have meant hundreds of people losing their jobs. Garlinghouse said he is glad the company made that call, even if it was far from clear at the time.
He also said he met with SEC officials four times between 2017 and 2019 without a lawyer present and never heard that XRP could be treated as a security. To him, that suggested Ripple was never given clear guidance before the case began.
Garlinghouse said the legal battle cost the crypto company about $150 million (€131 million). In July 2023, Judge Analisa Torres ruled that XRP itself is not a security, although the case still carried legal risk around institutional sales. Ripple and the SEC later dropped their appeals in August 2025, leaving a civil penalty of $125 million (€109 million) and a permanent ban on certain institutional XRP sales.
What It Means for the Crypto Market
The case is now widely viewed as one of the most important U.S. crypto cases in recent years. For European readers, it is a reminder of how much enforcement can shape token classification and how much room crypto companies have to keep building.
That also makes the Ripple case relevant beyond the U.S. Clear rules around token sales and oversight remain a major issue in Europe too, especially as regulators take a closer look at the line between crypto assets and investment products.
