Key facts
- Ripple CEO Brad Garlinghouse stated the company nearly shut down after the SEC sued it in 2020.
- The company considered distributing its XRP holdings to shareholders as an alternative to fighting the lawsuit.
- Garlinghouse cited the U.S. government's vast resources as a reason for considering closure.
- Ripple chose to fight the lawsuit to prevent hundreds of job losses.
- A judge ruled that XRP itself is not a security.
- The SEC lawsuit was settled last year.
Ripple CEO Brad Garlinghouse has disclosed that the company was on the brink of shutting down following the Securities and Exchange Commission's (SEC) lawsuit filed in 2020. Speaking at the University of Kansas School of Business, Garlinghouse explained that the government's seemingly infinite resources presented a significant challenge, making the prospect of closing the company a difficult but considered option.
He elaborated that an easier path would have involved distributing Ripple's XRP holdings to shareholders on a pro rata basis and informing the SEC that the company no longer held XRP, which the commission had deemed a security. However, Garlinghouse expressed satisfaction that this decision was not made, as it would have led to hundreds of employees losing their jobs.
The SEC's lawsuit, filed in December 2020, accused Ripple and its executives, including Garlinghouse and co-founder Chris Larsen, of selling XRP as an unregistered security. The long-running legal battle eventually saw a settlement last year, following a change in SEC leadership that has taken a more accommodating approach to crypto. Notably, Judge Analisa Torres had previously ruled that XRP itself is not a security.
Ripple has since secured new licenses in multiple jurisdictions, including a recent MiCA-compliant EU license, and its U.S. business is reportedly fully operational, with banks actively building on the XRP Ledger.