Ripple CEO reveals near-collapse during SEC litigation

The choice to fight the 2020 lawsuit was far from certain. Garlinghouse and co-founder Chris Larsen debated distributing their XRP reserves to shareholders on a pro rata basis, effectively ending the firm to escape what the CEO described as an agency with infinite power. The decision to persist was ultimately driven by a desire to protect hundreds of jobs, despite the massive financial toll. By the time the legal saga concluded in 2025, Ripple had spent approximately $150 million on defense.

The shadow of the final judgment

While the SEC’s suit forced a pivot in Ripple's strategy, the legal conflict left a complex legacy. Judge Analisa Torres ruled in 2023 that while programmatic sales on public exchanges did not violate securities laws, direct institutional sales did. This resulted in a $125 million penalty and a permanent injunction against future unregistered institutional offerings. Even after the Second Circuit closed the case in August 2025 following a rejected settlement attempt, these restrictions remain in force.

Ripple has since sought stability outside the United States, securing a Markets in Crypto-Assets license in Luxembourg to operate across the European Economic Area. This international expansion highlights the contrast between the regulatory clarity found abroad and the ongoing legislative gridlock in Washington. For the company, the near-shutdown disclosure serves as a reminder of how aggressive enforcement pressure shaped its survival, forced its move toward global markets, and defined its current operating constraints.