Ripple Nearly Shut Down Fighting the SEC, and XRP Still Hasn’t Recovered

Ripple Labs came close to dissolving itself rather than fight the Securities and Exchange Commission (SEC), chief executive Brad Garlinghouse said this week, describing the choice he and co-founder Chris Larsen faced after the agency sued the company in December 2020. Handing shareholders the firm’s XRP and walking away would have been simpler than years in court.

The case is over now. Ripple won the core legal question, picked up a licence to operate across Europe, and settled with the SEC for a fraction of the original penalty. XRP, the token the whole fight was about, still trades for less than a third of what it was worth the week the case formally ended.

Ripple Weighed Its Own Liquidation as the SEC Closed In

Garlinghouse laid out the moment in an appearance at the University of Kansas School of Business this week. He said the choice came down to a private company against a government agency with, in his words, “infinite power and resources.”

The SEC filed suit on December 22, 2020, accusing Ripple of raising more than $1.3 billion through an unregistered securities offering of XRP. It named Garlinghouse and Larsen personally as defendants, alongside the company itself, before both sides eventually filed a joint stipulation dismissing the commission’s appeal and Ripple’s cross-appeal in the Second Circuit.

The Simplest Way Out

The way out, as Garlinghouse described it, was straightforward. Ripple held a large treasury of XRP. The company could have handed those tokens to shareholders and closed its doors, ending the SEC’s case by ending Ripple itself.

• Distribute Ripple’s XRP holdings to shareholders on a pro rata basis
• Notify the SEC that the company no longer held any XRP
• Dissolve the business, ending the lawsuit by ending the company

Garlinghouse called it the easier outcome. He said it would have been a bad one anyway, since hundreds of Ripple employees would have lost their jobs. “I’m glad in retrospect, but that was not obvious at the time,” he said.

David Schwartz, Ripple’s chief technology officer (CTO) emeritus, backed up the account. He said the early legal advice described the company as unsalvageable and pushed executives to settle fast to protect themselves personally rather than fight for the business. Schwartz argued the SEC named Garlinghouse and Larsen personally to pressure a quick capitulation. Some social media commentators questioned whether a company of Ripple’s size was ever truly close to closing, and Schwartz later said parts of his account had been taken out of context by outlets chasing a panic angle.

He Met the SEC Four Times Without a Lawyer

Before the lawsuit, Garlinghouse said he met SEC staff four times between 2017 and 2019. He never brought a lawyer. “Why do I need a lawyer? I’m just telling you here’s how we use this technology,” he recalled thinking at the time.

Not once, he said, did anyone at the SEC warn him that XRP might be treated as a security. Then in 2020, the agency sued the company and both founders personally over the same token it had never flagged.

Fighting Cost $150 Million and Saved Hundreds of Jobs

Ripple chose to fight. Garlinghouse put the cost of that decision at $150 million in legal fees over four years, a bill he said was worth paying to keep hundreds of jobs intact.

The fight produced a split verdict. U.S. District Judge Analisa Torres ruled in July 2023 that XRP itself was not a security when sold on public exchanges, but that Ripple’s direct institutional sales did violate registration rules. The court later ordered a civil penalty of $125,035,150.

The two sides eventually settled. Under the deal, the commission agreed to release $75 million held in escrow back to Ripple, keeping $50 million to satisfy the penalty.

Not everyone at the agency signed off happily. SEC Commissioner Caroline Crenshaw cast the lone dissent, saying the deal “erases the investor protections we already won.” Her public dissent from the settlement argued the agency was gutting its own enforcement program from within.

XRP Trades Near $1.10, Down About 70% From Its Peak

XRP peaked near $3.65 in July 2025, about a month before the SEC and Ripple formally closed the case. It has not traded near that level since. The token changed hands around $1.10 this week, down roughly 70% from that peak.

The pattern holds across nearly every milestone Ripple has announced in 2026. When Luxembourg’s financial regulator issued a preliminary licence under the Markets in Crypto-Assets regulation (MiCA), the token barely moved in the direction bulls wanted. When full authorization followed two weeks later, it slipped again.

Analysts at 24/7 Wall St. have tracked every Ripple deal announced this year preceding a price drop, describing a pattern where the company’s dealmaking keeps stacking up without the token following.

Why Hasn’t Ripple’s Winning Streak Lifted XRP?

Ripple’s corporate wins sit at the company level. The MiCA licence, a pending U.S. bank charter, and a growing stablecoin business all expand what Ripple can sell. XRP’s price depends on payment volume actually routing through the XRP Ledger, and most of Ripple’s payments today still settle in RLUSD or ordinary currency, not XRP itself.

XRP community members see the last six years differently than the price chart suggests. BankXRP, a pseudonymous commentator, marked the anniversary of the 2020 suit by recalling how bad it once looked, describing exchanges delisting the token and remembering the thought that “Ripple is finished, the SEC just killed it,” in a July 11 post recalling exchanges delisting XRP overnight.

The same “dead” project people wrote off in 2020 is now sitting at the center of institutional adoption.

BankXRP wrote that line in the same thread, adding that institutional partnerships are stacking up globally and that banks are building on the XRP Ledger rather than just talking about it. Bear markets and lawsuits, the commentator argued, do not kill conviction. They just test who understood the thesis from the start.

A Merged CLARITY Act Draft Is Expected This Week

The next catalyst for XRP sits in Washington, not Brussels. A merged draft of the CLARITY Act, legislation that would classify XRP and similar tokens as commodities rather than securities under U.S. law, is expected the week of July 13, with floor action penciled in for the week of July 20.

The measure still needs Democratic votes it does not currently have, and Galaxy Research has cut its odds of passage this year to a coin flip.

Ripple survived the fight that almost ended it. Whether XRP ever trades like it did before the lawsuit still depends on a vote that hasn’t happened yet.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency markets, including XRP, are highly volatile and carry significant risk. Figures are accurate as of publication and may have since changed. Consult a licensed financial professional before making any investment decisions.