Ripple Labs has recently made a significant strategic investment by repurchasing $285 million worth of shares from early investors and employees. This move has set the company’s valuation at an impressive $11.3 billion. Since 2015, Ripple has raised $293.8 million in funding across 14 rounds, with investors limited to selling a maximum of 6% of their stake.
The company confirmed the tender offer, outlining its plan to set aside $500 million for the planned buyback. This sum is intended to enable the conversion of restricted stock units into shares and cover related taxes. Ripple’s CEO, Brad Garlinghouse, revealed that the company now holds over $1 billion in cash and over $25 billion in crypto, primarily in XRP coins. He anticipates regular share buybacks to provide liquidity for investors, but clarified that an IPO in the US is not imminent due to current regulatory uncertainties.
This decision comes in the wake of Ripple’s partial victory in its ongoing legal battle with the US Securities and Exchange Commission (SEC). A District Judge ruled that XRP’s sales on public exchanges did not constitute unregistered securities offerings, although institutional sales were deemed to qualify as such. The SEC’s appeal request was declined last October, and charges against Garlinghouse and the executive chairman were withdrawn.
Despite these legal challenges, Ripple has demonstrated its financial strength by acquiring Switzerland-based crypto custody firm Metaco for $250 million. Garlinghouse acknowledged the difficulties of growing amidst the SEC lawsuit, but noted that 95% of Ripple’s customers are non-US financial institutions.
This is not Ripple’s first foray into share buybacks. In early January 2022, it repurchased shares issued after securing $200 million in 2019 funding. This earlier buyback, which valued the company at $15 billion, marked a significant increase from the $10 billion valuation at the time of the funding round.
While rumors of a Ripple IPO have been circulating, experts suggest that the unfavorable macro situation and the legal dispute with the SEC have been deterrents. For now, Ripple seems to prefer share buybacks as an alternative exit route for early investors looking to cash out their investments. As of the time of writing, XRP was trading at $0.59013.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | North America |
| Countries | 🇺🇸 🇨🇠|
| Sentiment | neutral |
| Relevance Score | 1 |
| People | Brad Garlinghouse |
| Companies | US Securities and Exchange Commission (SEC), Ripple Labs, Metaco, Crunchbase, Reuters |
| Currencies | XRP |
| Securities | None |
