Ripple Labs Initiates Plan to Repurchase $285 Million Stake from Early Investors

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Jimmy Aki

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Jimmy Aki

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Jimmy has nearly 10 years of experience as a journalist and writer in the blockchain industry. He has worked with well-known publications such as Bitcoin Magazine, CCN, and Blockonomi, covering news...

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January 10, 2024

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Cryptocurrency company Ripple Labs has announced its plans to repurchase shares worth $285 million from early investors and staff.

🚀 #Ripple to buy back $285 million of its shares, valuing company at $11 billion.#crypto

— Aman🔶Sai (@amansaiofficial) January 10, 2024

According to a January 10 Reuters report, Ripple will integrate the Tender Offer initiative and allocate $500 million for the planned buyback to cover the expenses associated with converting restricted stock units into shares and taxes. Investors can sell up to 6% of their stake in this buyback.

Ripple CEO Brad Garlinghouse stated that the company intends to conduct regular share buybacks as part of an ongoing commitment to providing liquidity for investors.

Choosing a buyback over pursuing an Initial Public Offering (IPO) grants Ripple increased control and flexibility.

This approach offers investors an alternative means to cash out their investments without the complexities associated with a traditional IPO, which involves regulatory requirements, market volatility, and meeting investor expectations.

Garlinghouse emphasized the attractiveness of the tender offer, particularly as the company currently has no immediate plans to go public in the United States due to regulatory uncertainties with authorities like the Securities and Exchange Commission (SEC).

95% of Ripple Customers Are Non-US Financial Institutions

In an interview with Reuters, Ripple’s CEO emphasized the significant challenge posed to the platform by the legal battle with the SEC.

The US regulator filed a lawsuit against Ripple Labs on December 22, 2020, alleging that the company and two executives conducted an unregistered digital asset securities offering, raising over $1.3 billion through the sale of XRP.

Ripple raised $1.3 billion over a seven-year period to retail investors through its sale of XRP on an ongoing basis.  If the SEC prevails, XRP could become a pariah token as platforms that continued to list the crypto may have to register as securities exchanges.#newslead

— Mary Joy Baluyut | $BUBBLE (@MaryJoyBaluyut6) December 27, 2020

The SEC argued that most cryptocurrencies, including XRP, meet the definition of securities, although exceptions were made for Bitcoin and Ethereum.

Ripple achieved a partial court victory in July 2023 when US District Judge Analisa Torres ruled that the sales of XRP on public exchanges did not qualify as unregistered securities.

While the prolonged legal battle affected the company, Garlinghouse acknowledged that “95% of the firm’s customers are non-US financial institutions.”