Ripple once weighed shutting down and handing XRP to shareholders

Ripple almost dissolved in 2020, planning to give all its XRP to shareholders before deciding to fight the SEC lawsuit that had driven the token’s price to near‑zero levels【1】. The revelation underscores the high‑stakes legal fight that cost the firm roughly $150 million in fees and ultimately led to a court ruling that XRP is not a security【2】.

The shutdown plan and its fallout

In December 2020, the SEC sued Ripple, alleging the sale of XRP as an unregistered security. Major U.S. exchanges delisted the token, and its price collapsed, prompting warnings that holders should sell before the token “went to zero.” Within days of the filing, Ripple’s leadership considered winding the company down and distributing its entire XRP holdings to shareholders—a strategy that would have left the SEC with nothing to pursue【1】. The plan was ultimately rejected, largely because the company employed hundreds of staff and the leadership deemed the loss of those jobs “the easier outcome, but a bad one”【1】.

Legal battle and market rebound

Ripple chose to contest the case, spending about $150 million on legal fees over four years【2】. In 2023, a federal judge ruled that XRP itself is not a security, sparking a brief intraday rally of up to 96 % before settling lower【1】. By 2025, the SEC settled the dispute, with Ripple paying roughly $50 million of the $125 million penalty originally sought【1】. The ruling cleared a major regulatory cloud, allowing institutions to reconsider XRP and paving the way for the token’s historic appearance on the Kansas Jayhawks’ uniforms—a first for any cryptocurrency on a major U.S. college jersey【1】.

What to watch

• SEC‑related developments – any new enforcement action or guidance on XRP could move the price sharply.
• Federal Reserve master‑account request – Ripple’s pursuit of a Fed master account may affect its banking relationships and, indirectly, XRP demand.
• On‑chain supply dynamics – monitor large‑wallet movements of XRP, especially any potential distribution events that could affect circulating supply.

Ripple’s near‑shutdown episode highlights how legal risk can dictate corporate strategy in crypto. While the token has recovered enough to earn a spot on a college jersey, its future hinges on regulatory clarity and Ripple’s ability to embed itself in the U.S. financial system.