Ripple CEO Brad Garlinghouse said the company almost went out of business instead of fighting the U.S. Securities and Exchange Commission.
Speaking at the University of Kansas School of Business this week, Garlinghouse said he and co-founder Chris Larsen were seriously considering liquidating the company after the SEC filed a lawsuit in 2020. They were considering distributing Ripple’s XRP holdings to shareholders on a pro rata basis and dissolving the company.
Choose to fight
Garlinghouse described this as the easier path. He said the government had “infinite power and resources.” But they ultimately chose to fight because the closure would have cost hundreds of jobs. “In retrospect, I’m happy, but it wasn’t easy at the time,” he said.
The SEC sued Ripple in 2020, claiming that XRP was an unregistered security. The lawsuit also named Garlinghouse and Larsen personally. Garlinghouse said he met with SEC officials four times between 2017 and 2019 without a lawyer. He claims he was never told that XRP could be treated as a security, leading him to believe the company was denied clear rules.
A four-year legal battle
Garlinghouse estimated Ripple’s legal costs at $150 million over the four-year fight. Ripple ultimately prevailed when Judge Analisa Torres ruled that XRP itself was not a security. The two sides settled in May last year after the Trump administration installed new SEC leadership that took a more dovish approach toward crypto.
Ripple holds a large amount of XRP. If they had been dissolved, Garlinghouse said they could have simply returned those tokens to shareholders and ended the matter by winding up the company. But they didn’t take that route.
