LAWRENCE – Brad Garlinghouse disclosed this week that Ripple faced an existential choice after the Securities and Exchange Commission sued the company in December 2020 over whether XRP was an unregistered security: dissolve and distribute XRP holdings to shareholders on a pro-rata basis, or spend years and roughly $150 million fighting a case with uncertain odds.
They chose to fight.
Speaking at the University of Kansas School of Business, Garlinghouse said the decision was far from obvious at the time it was made. “I’m glad in retrospect, but that was not obvious at the time,” he told the audience, describing how he and co-founder Chris Larsen had seriously weighed winding the company down rather than entering a multi-year legal battle against federal regulators. Whether to shut down was not a rhetorical question. It was a board-level deliberation with real stakes on both sides.
The SEC’s 2020 lawsuit alleged that every XRP token ever sold by Ripple constituted an unregistered securities offering, a characterization that, if upheld, would have subjected every transaction involving XRP to securities law and effectively ended Ripple’s institutional payments business. The agency named Garlinghouse and Larsen personally in the complaint, a move that raised the pressure well beyond a standard corporate enforcement action.
The shutdown scenario Garlinghouse described had a particular logic to it. Distributing XRP pro-rata to existing shareholders would have unwound Ripple’s institutional relationship to the token, potentially defusing the core argument that the company was profiting from XRP sales. What it would have done to the individual shareholders who then held those tokens, whether the SEC would have pursued them or whether XRP would have continued trading without a corporate entity behind it, Garlinghouse did not address.
Instead, Ripple litigated. The legal campaign cost approximately $150 million over four years, a figure Garlinghouse cited directly. The expenditure was not without return: in July 2023, U.S. District Judge Analisa Torres issued a ruling that XRP itself was not a security when sold on public secondary markets, drawing a line the crypto industry had sought for years. Torres also found that Ripple’s institutional sales did violate securities law, a partial loss that kept the litigation alive, but the secondary market holding protected XRP’s exchange-traded existence.
The broader case settled in May 2025, after the Trump administration installed new SEC leadership that had signaled a more crypto-permissive stance. The settlement terms were not disclosed. The SEC confirmed only that the case was closed.
Ripple now operates with a clearer US regulatory profile than it had during the litigation years. The company has moved aggressively into international licensing: its Luxembourg subsidiary received a full MiCA-compliant regulatory license from the country’s financial authority earlier this month, extending Ripple’s authorized reach deeper into the European Union. Garlinghouse’s Kansas remarks came in the same week that other crypto firms were receiving their own federal authorizations inside the United States.
The disclosure sits in an unusual place in the narrative of crypto’s regulatory moment. Circle Internet Group received a national trust bank charter from the OCC this week, bringing its USDC stablecoin under direct federal supervision. The arc from Ripple’s near-dissolution in 2021 to the current environment, in which companies are being licensed rather than sued, is the kind of before-and-after that executives tell at business schools. Garlinghouse was doing exactly that.
The broader crypto market has shown resilience this year even as geopolitical and macroeconomic pressures mounted, and XRP has tracked that broader recovery. Trading well above its 2020–2021 lows, the token is no longer priced as an asset under regulatory threat. That shift owes something to the May 2025 settlement, and something more to the political shift that made the settlement possible.
What Garlinghouse’s Kansas appearance does not settle is the more uncomfortable question embedded in the disclosure: how many companies in similar positions made the opposite call. The crypto sector lost entities during the 2020–2023 enforcement period not because they lost in court, but because they ran out of money, ran out of patience, or faced leadership teams that decided the odds did not justify the fight. Ripple fought. They had the resources and the legal team. Not everyone did.
The full context of Garlinghouse’s University of Kansas remarks was reported by CoinDesk.
