Ripple nearly dissolved and distributed XRP to shareholders rather than pursue its legal battle with the SEC, CEO Brad Garlinghouse told investors in a speech. Garlinghouse said he and co-founder Chris Larsen considered the option during the company's SEC litigation, ultimately deciding to fight instead.
The decision to pursue the case preserved hundreds of jobs at Ripple but cost the company approximately $150 million in legal fees over four years, according to Garlinghouse's remarks. The SEC sued Ripple in late 2020, alleging that XRP sales constituted unregistered securities offerings.
Garlinghouse made the comments at a July 12 speech at the University of Kansas, where he outlined the strategic choice facing the company at the height of regulatory pressure. The litigation spanned years and represented a significant financial commitment for the payments firm. Garlinghouse framed the decision to litigate as a choice between operational continuity and financial dissolution.
Ripple's legal battle with the SEC became one of the most closely watched cryptocurrency enforcement actions, with implications for how digital assets are classified under federal securities law. The company has maintained that XRP does not qualify as a security under the Howey test and that secondary market sales should not be subject to securities registration requirements.