Ripple Labs is reportedly planning a tender offer to buy back a $285 million stake from early investors and employees. The company intends to spend a total of $500 million on the transaction, which includes the cost of converting restricted stock units to common shares. Investors will only be able to sell 6% of their holdings, placing the company’s valuation at $11.3 billion. Since 2015, Ripple has raised a total of $293.8 million in funding over 14 rounds.
The company currently holds more than $25 billion worth of crypto, primarily XRP, and has over $1 billion in cash on its balance sheet, according to CEO Brad Garlinghouse. Ripple is also expected to conduct additional buybacks as it aims to provide an exit for early investors. The company has no plans to go public in the United States, where it is based, due to the uncertain regulatory environment.
Ripple’s buyback strategy offers an alternative exit route for early investors, diverging from the traditional path of going public. This approach allows investors to cash out their investments instead of going to the typical liquidity event known as an initial public offering (IPO). By choosing a buyback over an IPO, Ripple retains greater control and flexibility of its business, avoiding additional regulatory requirements, market volatility, and managing investor expectations.
Despite the challenges of growing amidst an SEC lawsuit, 95% of Ripple’s customers are non-US financial institutions, as stated by Garlinghouse. Ripple Labs, the technology company behind the Ripple payment protocol and the XRP token, has been involved in a lawsuit with the U.S. Securities and Exchange Commission (SEC) since December 2020. The lawsuit alleges that Ripple conducted an unregistered securities offering through the sale of XRP.
The case saw a significant turning point in July 2023, when Judge Analisa Torres partially ruled in favor of the company by stating that XRP is not a security in relation to its programmatic sales on exchanges. However, the court found that XRP was a security when sold to institutional investors via funding rounds. As of the time of writing, XRP trades at $0.56 with a market capitalization of $30.7 billion.
Meanwhile, the shift from utility to equity tokens in Web3 is opening new paths for blockchain funding. Web3 projects are increasingly turning to equity tokens as a more secure and transparent way to raise capital. Tokenization solution provider Brickken is simplifying the process of issuing equity tokens, making it easier for projects to tap into the benefits of this innovative approach to fundraising.
Asset tokenization, the process by which an issuer creates digital tokens on a distributed ledger or blockchain, has become one of the biggest trends. Tokenized assets have already established a $75 billion market, with the potential to reach as high as $10 trillion by 2030 while penetrating asset classes like private equity, corporate debt, real estate, and fine arts.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | North America |
| Countries | 🇺🇸 |
| Sentiment | neutral |
| Relevance Score | 1 |
| People | Analisa Torres, Brad Garlinghouse |
| Companies | U.S. Securities and Exchange Commission, Ripple Labs, Cointelegraph, Crunchbase, Reuters |
| Currencies | XRP |
| Securities | None |
