Ripple came close to collapse fighting SEC, says Garlinghouse, in case that reshaped crypto law
Ripple's chief executive says the firm risked shutting down rather than settle with the SEC, in a case now shaping global crypto regulation.
Ripple Labs came close to shutting down entirely rather than settle with the US Securities and Exchange Commission, according to chief executive Brad Garlinghouse, who disclosed the scale of the existential risk the firm faced during its five-year legal battle with the regulator. Speaking at the KU School of Business, Garlinghouse said the leadership team weighed whether fighting the US government was worth risking the company’s survival.
The remarks offer the clearest account yet from Ripple’s own leadership of how close the case came to ending the company, and underline how far-reaching the consequences of the litigation have been for the wider digital assets industry, including firms operating under Europe’s newer regulatory frameworks.
A binary choice: settle or fight
The SEC filed suit against Ripple Labs on 22 December 2020, alleging the company had conducted unregistered sales of XRP worth more than $1.3 billion, treating the token as an unregistered security. Garlinghouse described the resource imbalance between a private company and a federal regulator as stark, framing the decision facing Ripple’s board as effectively binary: settle, and risk an implicit admission of wrongdoing, or fight, and risk bankruptcy.
Ripple chose to fight. Reports of the eventual cost of that decision vary: Garlinghouse has been reported as citing a legal bill of around $150 million, while other accounts of the litigation put the figure closer to $125 million. Either way, the case became one of the longest and most closely watched legal disputes in the crypto industry’s history, running from the initial filing in 2020 through to 2025.
A ruling that split the market in two
The litigation eventually produced a landmark distinction that has since informed how token sales are treated by regulators and courts. A federal court ruled that certain “programmatic” sales of XRP — trades executed on exchanges to retail buyers who had no way of knowing they were purchasing from Ripple directly — did not constitute securities offerings, even as other categories of sales made directly to institutional investors were treated differently.
That split has since become a reference point across the industry, shaping how exchanges assess listing risk, how projects structure token distributions, and how regulators in multiple jurisdictions approach the question of when a digital asset should be classified as a security.
Why it matters for European regulation
For UK and European market participants, the Ripple case remains a significant reference point even though it was fought in a US court under US securities law. The Markets in Crypto-Assets Regulation (MiCA) and the UK’s evolving crypto framework have both had to grapple with similar classification questions — namely, at what point a token sale or secondary-market trade triggers the kind of investor-protection obligations associated with traditional securities.
Garlinghouse’s disclosure also serves as a reminder to institutional investors and compliance teams of the sheer financial exposure a protracted regulatory dispute can create for even a well-capitalised crypto firm, a consideration that continues to inform how exchanges, custodians and asset managers assess counterparty and listing risk across jurisdictions.
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