Now, fresh comments from Ripple Chief Technology Officer David Schwartz have shed new light on just how serious the situation became behind closed doors in the early days of the case. Schwart
Now, fresh comments from Ripple Chief Technology Officer David Schwartz have shed new light on just how serious the situation became behind closed doors in the early days of the case.
Schwartz, better known in the crypto community as "JoelKatz," said Ripple's legal advisers at one stage believed the company had little chance of survival after the SEC filed its lawsuit in December 2020.
The discussion began on X, after XRP community member @unknowDLT questioned Ripple CEO Brad Garlinghouse's recent claim that the company had come close to shutting down following the SEC's action.
Responding to the member, Schwartz backed Garlinghouse's account, saying Ripple received legal advice that the company was "done" and "unsavable."
According to him, lawyers recommended that executives strike a deal to protect themselves.
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"They got advice from lawyers that the company was done, unsavable, and they should cut a deal to save themselves," Schwartz wrote.
He added that naming Garlinghouse and Executive Chairman Chris Larsen personally in the lawsuit was likely intended to encourage such an outcome.
“I think the SEC named Brad and Chris personally because that's the expected response to such a suit,” he added.
Crypto lawyer and Senate candidate John Deaton strongly supported Schwartz's remarks, arguing that suing individual executives can create significant settlement pressure even when fraud is not alleged.
In a post on X, Deaton pointed to comments previously made by former SEC Chairman Jay Clayton, who had suggested that naming executives in enforcement actions could provide the government with additional leverage during settlement negotiations.
He also recalled that, during the Ripple case, SEC lawyers sought extensive financial records belonging to Garlinghouse, Larsen and their family members before a judge rejected the request.
Trending on TheStreet Roundtable“Don’t forget, these were the same ethically-challenged SEC lawyers who an appellate court described as arbitrary and capricious as well as sanctioned SEC lawyers in the Debt Box case for perpetuating a fraud upon the court,” he wrote.
According to Deaton, the pressure extended beyond the company itself, forcing the executives to explain to their families that they were personally being sued by the U.S. government.
The Ripple case ultimately became one of the crypto industry's most closely watched legal battles, with Garlinghouse and Larsen choosing to fight the allegations rather than settle.
Schwartz's latest comments suggest that, despite the eventual courtroom victories, Ripple's leadership was once advised that the company had little chance of surviving the SEC's lawsuit.
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