Ripple announced a $200 million funding led by “Tetragon with participation from SBI Holdings and Route 66 Ventures.” According to the press release, the funding will empower the use of blockchain and the broader utility of the digital asset XRP and the XRP Ledger.
XRP rose by nearly 4% post the announcement. The price of XRP at 4: 00 hours UTC on 21st December 2019 is $0.193.
While the news is positive for the XRP community, there are many who continue to doubt the role of Ripple and XRP. According to the funding amount, Micheal Arrington, founder of TechCrunch, CrunchBase and Arrington XRP Capital, notes,
If you’re perplexed as to why investors would aggressively invest in Ripple at a $10b valuation, the problem may be you.
The overall outlook painted by Arrington does seem plausible. However, there according to leading crypto analysts, it is a method to unload the XRP in the market. Ryan Selkis, the founder of Messari replied,
Was there a warrant for XRP purchases attached to the equity investments? If no, impressive. If yes, obfuscated XRP II sale by another name. I hope the former!
Not only Selkis, but others like Nic Carter, the founder of Coinmetrics and Adamant Capital seem to agree with the criticism. Ripple might be using the funding amount to dump the XRP in the market through this new entity. On confrontation, Selkis notes,
I’ve done more research on the companies’ XRP sales practices than some of the investors I’m sure. 90%+ of the companies revenue is from XRP sales. So there’s no path to $10bn Val without XRP rights.
Even Brad Garlinghouse, the CEO of Ripple agrees that Ripple holds a large amount of XRP. Hence, the audit reports of the company’s valuation at $10 billion would require to include their share of XRP as well.
Moreover, this year saw a rise in the use of XRP ledger surprisingly during the second half. However, the downtrend it price has driven it below 24 months lows, erasing the bull run of 2017 completely. It could have been a general increase in the transactions or just the dumping of XRP.
Furthermore, even Greenspan noted in his update that there is a long way to go before the mainstream adoption of these ledgers in the financial world (like the ACH). Moreover, Ripple itself continues to serve the industry even without the use of the XRP ledger. On whether or not the firm has been dumping the XRP on its customers to support its’ ventures remains suspicious seeing the price action in 2018-19.
Do you think that Ripple is unloading XRP or there is real utility to the projects? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com