Ripple almost didn’t make it. Brad Garlinghouse, the company’s CEO, revealed that Ripple seriously considered shutting down operations after the SEC filed its lawsuit against the firm in December 2020.

Speaking at the KU School of Business, Garlinghouse pulled back the curtain on what he described as an existential moment for the company, one where the leadership team had to decide whether fighting the US government was worth the risk of losing everything.

The lawsuit that almost ended Ripple

The SEC sued Ripple Labs on December 22, 2020, alleging that the company had conducted unregistered sales of XRP worth over $1.3 billion. In the eyes of the regulator, XRP was a security, and Ripple had been selling it without following the rules that govern securities offerings.

Garlinghouse emphasized the massive resource imbalance between a private company and a government regulator. The choice was binary: settle and potentially admit wrongdoing, or fight and risk bankruptcy. Ripple chose to fight. That decision turned into one of the longest and most consequential legal battles in crypto history.

Five years of litigation

The case dragged from 2020 all the way through 2025. The court ruled that certain programmatic sales of XRP, meaning sales on exchanges to retail buyers who didn’t know they were buying from Ripple, did not constitute securities offerings. The ruling drew a line between institutional sales (which the court found did violate securities law) and secondary market transactions.

Ripple ultimately paid a civil penalty of $125,035,150. Both parties eventually dismissed their respective appeals in 2025, drawing the curtain on a saga that consumed half a decade.

What Ripple did next

With the legal cloud lifted, Ripple moved aggressively to expand internationally. The company secured an EU MiCA license, positioning itself within Europe’s emerging regulatory framework for digital assets.

What this means for investors

Ripple’s survival and partial legal victory established a judicial opinion drawing real boundaries around what constitutes a securities offering for digital assets. The ruling validated that buying a token on the secondary market isn’t the same as participating in an investment contract, affecting how exchanges list tokens, how institutions allocate capital, and how regulators approach enforcement.