Lawyer Debunks XRP Escrow Dump Rumors

The XRP escrow dump theory has taken a major turn as lawyer Bill Morgan soundly debunks the controversy, revealing Ripple’s token management strategy. As critics slam Ripple’s escrow mechanism, Morgan sheds light on the real narrative. With the SEC’s own recognition that the escrow was designed to support XRP’s price, Morgan’s arguments deliver a fatal blow to the theory.

Lawyer Reveals Ripple’s XRP Escrow Mechanism

The XRP escrow dump theory is once again under scrutiny, with critics accusing Ripple of intentionally depressing the token’s price. In response, XRP lawyer Bill Morgan says that Ripple is committed to supporting the XRP ecosystem through its escrow management strategy.

To reinforce his statement, Morgan stated that the SEC has recognized Ripple’s real motive. His X post read, “Even the SEC recognised that the escrow was intended to buttress the price of XRP not deflate it.” Morgan noted that the SEC had considered the escrow mechanism as one of the factors that would lead investors to expect profits from Ripple’s efforts. He added that this was just one of many grounds he had previously cited to discredit the escrow dump theory.

Notably, this backlash comes on the heels of Ripple’s escrow release in July. As reported by CoinGape, Ripple unlocked 1 billion tokens in two tranches of 500 million each.

Ripple Faces Criticism Despite XRP Price Surge

It is noteworthy that Ripple still faces criticism for its XRP escrow mechanism even though the token price surged from the early $0.5 to more than $3. Amid this positive market sentiment, critics argue that Ripple’s monthly escrow releases are intentionally designed for the price dump.

Previously, in February 2025, Morgan addressed the misconception, highlighting that the monthly XRP releases represent a small fraction of the daily trading volume. Moreover, as the total XRP supply grows, the proportion of tokens held in escrow continues to decline. He added that this move doesn’t have any harmful effect on the token’s price.

Significantly, the attorney’s original point was that the XRP escrow dump theory is fundamentally disconnected from the token’s real performance. He pointed out that despite ongoing XRP releases from escrow, the asset’s price has risen, suggesting that other factors would be responsible for any future price declines. His X post read,

What is there to say about the discredited escrow dump theory that has not already been said. If it needed a coup de grace to send it to its final resting place, it was the massive rise in XRP price from $0.50 to over $3.00 despite further releases of XRP by Ripple from escrow in November, December 2024 and January 2025.

In June, Morgan also debunked rumors of the US government potentially seizing the escrow for the national reserve. He firmly dismissed speculation about government plans, asserting, “No, it won’t.”

What is Ripple’s XRP Escrow?

In 2017, Ripple established its escrow system, locking up 55 billion XRP to promote market stability and prevent token oversaturation. The platform will release I billion tokens each month, but only a portion – typically between 200-350 million – is utilized to support its payment services and ecosystem initiatives.

It is noteworthy that the unused tokens are returned to escrow, maintaining a delicate balance between supply and demand. Reportedly, this system aims to provide sufficient liquidity for practical applications while mitigating downward price pressure.