XRP Ripple came within weeks of dissolving after the US Securities and Exchange Commission sued the company in 2020, CEO Brad Garlinghouse revealed in a KU Hustle podcast interview at the University of Kansas School of Business, published July 8.

The disclosure reframes the entire SEC vs. Ripple legal battle not just as a courtroom fight over token classification, but as an existential crisis that nearly erased one of crypto’s most prominent payment companies and the XRP token’s primary institutional backer from the map.

Did you know Ripple almost shut down entirely when the SEC first filed its lawsuit?

While the public knows Ripple won, few realize how close they came to throwing in the towel, or that Brad Garlinghouse proactively met with the SEC four times before the lawsuit without a single… pic.twitter.com/XSZ0qQqCKO

— XRP Myth Buster (@XRPMythBuster) July 11, 2026

This bombshell from Brad Garlinghouse comes as XRP USD begins the week trading at $1.08, down -1.3% over the past 24 hours, with more than $828M in daily trading volume.

As for ETF flows, Ripple ETFs closed last week with modest inflows of $107,000, bringing the overall total to +$1.4Bn since they launched in November 2025, per CoinGlass data.

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Ripple Considered Distributing XRP and Walking Away

Garlinghouse said the internal calculus at Ripple was stark: the company holds a large XRP reserve, and one viable response to the SEC lawsuit was to distribute those holdings to shareholders on a pro rata basis and shut its doors.

“We almost decided to shut down the company when the SEC sued us … The company owns a lot of XRP … We could have shut it down and … just distribute the XRP to shareholders on a pro rata basis,” Garlinghouse said.

He framed the hypothetical dissolution bluntly: “You guys think these are securities. Ripple doesn’t own it anymore. Ripple’s gone now.” For XRP holders, that scenario would have meant a token without its primary corporate steward, institutional sales operation, or payment-network development budget – a structurally different asset than what trades today.

Garlinghouse acknowledged the shutdown path had a certain cold logic to it. “Hundreds of people would have lost their jobs. I think that was a bad outcome, but in some ways it was the easier outcome,” he said. Ripple chose to fight instead, a decision he described as anything but obvious at the time: “That was a difficult decision, and obviously I’m glad in retrospect, but that was not obvious at the time.”

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$150M in Legal Fees, Five Years of US Stagnation

Can Ripple's stablecoin return to glory?

After reaching an ATH supply of over $1.81B at the start of June, @Ripple's $RLUSD has contracted to just $1.53B at time of writing.$XRP's native stablecoin is now the 9th largest stablecoin by market cap, behind other new entrants like… pic.twitter.com/6qaKVb3JGf

— BSCN (@BSCNews) July 13, 2026

The cost of staying in the fight was steep. Garlinghouse said Ripple spent $150M in legal fees over four years, while its US business remained largely frozen for roughly five years after the lawsuit began.

The SEC’s December 2020 complaint alleged Ripple sold $1.3Bn of XRP as an unregistered security, a charge that triggered immediate market damage, with the XRP price crashing approximately 60% in a week as major exchanges suspended or delisted trading.

Garlinghouse also noted that before the suit was filed, he met with SEC officials four separate times between 2017 and 2019 to explain how Ripple’s blockchain-based payment system used XRP. Regulators never indicated during those sessions that XRP could be considered a security.

The crypto legal battle reached its clearest resolution in July 2023, when US District Judge Analisa Torres issued a split ruling: XRP is not a security when sold on public exchanges, though institutional sales were treated differently under securities law.

The distinction that XRP Ripple is not a security in retail markets became a landmark precedent for how tokens are classified across the industry.XRP’s market positioning shifted materially once that clarity landed.

Ripple was ordered to pay a $125M civil penalty, down sharply from the $2Bn the SEC originally sought. Both sides filed appeals, then agreed to dismiss them. The case formally concluded in August 2025 after the appeals were withdrawn.

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Regulatory Shift Helped Close the Case

SEC CHAIR PAUL ATKINS JUST ANNOUNCED "PROJECT CRYPTO" AND IT IS BIGGER THAN MOST PEOPLE REALIZE

Here's what he said:

"Over the past year, we have moved purposefully to answer President Trump's call to make America the crypto capital of the world. Through what we're calling…

— WOLF Bitcoin (@WOLF_Bitcoin_) July 12, 2026

The broader crypto regulation environment also changed materially in the case’s final stretch. Under SEC Chairman Paul Atkins and the Trump administration, the agency moved away from its prior regulation-by-enforcement posture toward greater industry engagement and a focus on traditional fraud cases rather than sweeping corporate penalties.

That shift contributed to the conditions under which both sides found resolution acceptable. Garlinghouse has since publicly praised the new SEC direction. Ripple’s post-lawsuit business strategy now targets the global payments market with the legal overhang lifted and the US injunction vacated.

For the XRP market, the survival story carries a direct implication: the asset’s current legal standing and price trajectory, including a roughly 400% surge from the November 2024 election through early 2026, are inseparable from Garlinghouse’s decision to absorb $150M in costs rather than hand shareholders a bag of tokens and close the company.

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The post XRP Ripple Was Weeks From Closing In SEC Lawsuit Reveals Garlinghouse appeared first on 99Bitcoins.

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