Ripple Nearly Shut Down, CEO Reveals XRP Distribution Plan

Ripple came close to shutting down after the U.S. Securities and Exchange Commission filed suit in 2020, company CEO Brad Garlinghouse disclosed during remarks at the University of Kansas School of Business. Leadership debated whether to end operations and return XRP to shareholders rather than continue the legal fight.

Garlinghouse told the audience the company considered dissolving and distributing its XRP holdings on a pro rata basis. He described the scenario as one way Ripple might have responded to the SEC’s assertion that XRP sales were unregistered securities.

The SEC’s 2020 complaint alleged Ripple sold $1.3 billion of XRP in unregistered securities transactions. Garlinghouse estimated Ripple spent about $150 million on legal fees over the multi-year dispute, and he said the company’s U.S. business was largely stagnant for roughly five years after the suit was filed.

A 2023 federal court ruling by U.S. District Judge Analisa Torres produced a split result. The decision found that XRP sales on public exchanges were not securities transactions, while certain institutional sales did fall under securities law. The court later ordered Ripple to pay a $125 million civil penalty and comply with an injunction related to securities compliance. Both parties filed appeals and then agreed to withdraw them; the litigation formally concluded in August 2025.

Garlinghouse recounted meeting with SEC officials four times between 2017 and 2019 to explain Ripple’s technology and the role of XRP in its payment system, saying regulators did not indicate at those meetings that XRP would be treated as a security.

He outlined a hypothetical exit in which Ripple would cease to exist and its XRP holdings would be distributed to shareholders, including the observation that such a move would have led to significant job losses. “You guys think these are securities. Ripple doesn’t own it anymore. Ripple’s gone now,” he said, and he noted that “hundreds of people would have lost their jobs.”

After deciding to remain in business, Ripple continued its legal challenge and now faces the task of rebuilding growth in the U.S. market and addressing the operational effects of years of legal uncertainty. Garlinghouse also pointed to shifts in SEC leadership and enforcement priorities during the dispute, saying the agency moved away from broad enforcement against crypto toward greater engagement with crypto firms and a focus on traditional fraud enforcement.