Ripple Labs Initiates $285 Million Share Buyback, Valued at $11.3 Billion

Ripple Labs Initiates $285 Million Share Buyback, Valued at $11.3 Billion
Ripple Labs Initiates $285 Million Share Buyback, Valued at $11.3 Billion

Ripple Labs, the company behind the XRP cryptocurrency, has initiated a share buyback program, according to a Reuters report. This action, valued at $285 million, demonstrates Ripple’s commitment to enhancing shareholder value.

Two confidential sources told Reuters that this tender offer allows investors to sell up to 6% of their stake in the privately held company.

Ripple officially confirmed the buyback, highlighting its intent to allocate an additional $500 million to cover the conversion of restricted stock units into shares and address associated taxes. Furthermore, the company expressed its commitment to regular share buybacks, providing liquidity for its investors.

Ripple Will Not IPO in the US for Now: Garlinghouse

Brad Garlinghouse, Ripple’s CEO, emphasized the company’s decision to remain private in the U.S., citing regulatory uncertainties in the cryptocurrency landscape. Furthermore, Garlinghouse disclosed that Ripple holds over $1 billion in cash and boasts a balance sheet with over $25 billion worth of crypto, predominantly in XRP.

Ripple, a pivotal player in the crypto space, facilitates cross-border transactions through its payment system utilizing XRP. Established in 2012, the company serves over 300 customers, primarily non-U.S. financial institutions. Notably, Ripple expanded its portfolio by acquiring Swiss crypto custody firm Metaco for $250 million in May.

Ripple Remains in Defense Mode Against the SEC

This share buyback initiative follows a recent legal development in Ripple’s ongoing battle with the U.S. Securities and Exchange Commission (SEC).

In 2020, the SEC sued Ripple for allegedly selling unregistered securities in the form of XRP. Despite an interim victory where a U.S. District Judge ruled that XRP sales on public exchanges were not securities offerings, the case remains unresolved, posing potential risks to Ripple’s business and the XRP market.

XRP, currently the sixth-largest cryptocurrency with a market capitalization of $0.56 per coin, has faced challenges compared to its counterparts, such as Bitcoin and Ethereum, which have recently reached new highs.

The underperformance of XRP relative to other crypto assets may be attributed to its limited institutional adoption, particularly in the context of spot bitcoin ETFs. The SEC-approved spot bitcoin ETFs, including BlackRock’s iShares Bitcoin ETF, Ark Invest/21Shares, and Bitwise’s Bitwise Bitcoin ETF (BITB), are set to commence trading as early as January 11.

Image via X (Santiment)
Image via X (Santiment)

While this milestone opens doors for mainstream investors to engage with the crypto industry, it also poses a challenge for altcoins like XRP, which may face difficulty competing with Bitcoin’s established dominance and popularity.

XRP React to Bitcoin ETF Frenzy

While XRP has a more conservative price reaction to the whole Bitcoin ETF frenzy, it has recorded some decent gains over the past 24 hours as the SEC gives the green light. As of the time of this report, XRP was trading at $0.6076 as it reclaimed its position above the $0.5865 level.

XRP/USD Daily Chart via TradingView
XRP/USD Daily Chart via TradingView

With the buildup to the ETF event, we can expect to see XRP sustain a rally over the coming days, in tandem with BTC, and retest the $0.6800 mark for the first time in a month. Clearing this top could open the way for a shot at $0.8250 in the coming weeks.

On the flip side, we do not see a bearish turnaround pushing the price below the $0.5500 floor, at least not in the near term.

XRP Statistics Data

XRP Current Price: $0.6076

Market Cap: $32.6B

XRP Circulating Supply: 54.2B

Total Supply: 100B

XRP Market Ranking: #6

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Azeez Mustapha

Azeez began his FinTech career path in 2008 after growing interest and intrigue about market wizards and how they managed to become victorious on the battlefield of the financial world. After a decade of learning, reading and training the ins and outs of the industry, he’s now a sought after trading professional, technical/currency analyst and funds manager – as well as an author. He is a Senior Crypto trader and market analyst at Learn2.trade

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Azeez Mustapha
Azeez began his FinTech career path in 2008 after growing interest and intrigue about market wizards and how they managed to become victorious on the battlefield of the financial world. After a decade of learning, reading and training the ins and outs of the industry, he’s now a sought after trading professional, technical/currency analyst and funds manager – as well as an author. He is a Senior Crypto trader and market analyst at Learn2.trade