David Schwartz Says Lawyers Told Ripple It Was Unsalvageable After SEC Lawsuit

Ripple CEO Brad Garlinghouse says the company seriously considered shutting down after the U.S. SEC sued Ripple in 2020. 

He described the decision as one of the toughest of his career. Speaking at the University of Kansas School of Business, Garlinghouse said Ripple’s leadership debated whether to dissolve the company instead of fighting what became a four-year legal battle.

Ripple Considered Shutting Down

Garlinghouse said he and Ripple co-founder and Chairman Chris Larsen questioned whether Ripple should continue after the SEC accused the company of conducting unregistered securities sales through XRP.

“We almost decided to shut down the company when the SEC sued us,” Garlinghouse said.

One option was to dissolve Ripple and distribute its XRP holdings to shareholders on a pro-rata basis. Garlinghouse acknowledged that hundreds of employees would have lost their jobs. However, he said shutting down seemed easier than taking on the SEC.

In the end, Ripple chose to fight. Garlinghouse said he is “glad” the company made that decision, even though the outcome was uncertain at the time.

SEC Gave No Warning

Garlinghouse said Ripple repeatedly sought regulatory clarity before the lawsuit. However, he said the SEC never indicated that it viewed XRP as a security.

According to Garlinghouse, he met with SEC officials four times between 2017 and 2019 without legal counsel. He said the meetings focused on Ripple’s technology and XRP’s use cases. At no point, he added, did the agency warn him that XRP could be treated as a security.

Garlinghouse also revealed that the SEC offered him a personal settlement. Under the proposal, the agency would drop its case against him if he paid a fine, while continuing its lawsuit against Ripple. He called the offer “distasteful” and suggested it was meant to pressure him into settling.

He added that the lawsuit ultimately cost Ripple about $150 million in legal fees.

Garlinghouse Defends XRP’s Role

Garlinghouse also defended XRP’s role in Ripple’s payments business. He contrasted it with Bitcoin, saying Bitcoin is better suited for some use cases but remains relatively slow and expensive for payments.

He argued that XRP offers faster settlement, lower transaction costs, and better scalability for cross-border transfers.

Garlinghouse also stressed that XRP is an open-source blockchain asset. While Ripple uses it in its payment products, he said it does not represent ownership in the company like traditional shares.

David Schwartz Reactions

Garlinghouse’s comments sparked discussion within the XRP community. Responding to doubts about whether Ripple was really close to shutting down, Ripple CTO Emeritus David Schwartz said the company received legal advice that it was “done” and “unsavable.” He said some lawyers recommended that executives strike a deal to protect themselves.

Schwartz added that he believes the SEC named Garlinghouse and Larsen personally because it was the expected approach in enforcement actions.

They got advice from lawyers that the company was done, unsavable, and they should cut a deal to save themselves. I think the SEC named Brad and Chris personally because that’s the expected response to such a suit.

— David ‘JoelKatz’ Schwartz (@JoelKatz) July 12, 2026

XRP-focused YouTuber Moon Lambo questioned why Ripple’s legal advisers believed the company had no chance of surviving. He described the recommendation to give up without a fight as an extreme position and said he was relieved Ripple chose to contest the case instead.