RIPPLE CEO REVEALS TRUTH ABOUT COMPANY’S SALES OF XRP STASH
If you’ve been in the crypto industry for a while now, you likely know of the controversy regarding XRP, specifically that fintech upstart Ripple owns a large portion of the cryptocurrency. While the company pledges to not have made the cryptocurrency, it undoubtedly owns a large sum of the asset, which is released from escrow on a monthly basis.
Critics say that the centralization of XRP in Ripple’s coffers, so to say, has acted as a negative weight on the market for the cryptocurrency, which posted a -50% performance in 2019 while Bitcoin gained 90% in the same time period.
While the statement has been rebutted by Ripple — whose CEO, Brad Garlinghouse says that it depressing the price of the cryptocurrency they hold so much of makes no sense — critics got a further boost just last week, when the Financial Times released a report about the company.
Ripple Wouldn’t Be Profitable Without XRP Sales
On February 28th, the Financial Times’ Alphaville column released an in-depth report about Ripple, a polarizing entity in the cryptocurrency space. The report some long-held questions about the company, specifically about its profitability and business structure.
Garlinghouse himself in a “conversation with the FT in August 2019” purportedly said that his company’s sale of XRP, which they can choose not to do or do, has been integral to Ripple’s profitability. “If you took away our software revenues, that would make us less profitable,” he explained to the outlet on the matter.
In fact, he “clarified later” that sans the sale of the cryptocurrency, the company may be in the red:
“We would not be profitable or cash flow positive [without selling XRP], I think I’ve said that. We have now.”
Importantly, it wasn’t made clear what exactly Garlinghouse’s original comment was, though the point remains that the cryptocurrency would not be nearly as profitable without the cryptocurrency.
This statement has undoubtedly jostled some in the industry.
CNN-featured analyst Luke Martin issued the below tweet in the wake of the article’s publishing, stating that “dumping XRP on you is how Ripple stays alive” and garnering quite the number of likes from the industry.
While that may be true, the money being garnered from XRP has purportedly gone to good use.
Per previous reports from Ethereum World News, the sale of the asset helps expand XRP’s “utility,” with Garlinghouse writing on Twitter:
“[S]ales are about helping expand its utility – building RippleNet & supporting other biz building w/XRP ie Dharma & Forte. Reality is we decreased our sales by volume Q/Q and since then the inflation rate of [the cryptocurrency’s] circulating supply has been lower than that of BTC and ETH.”