Ripple set to buy back $285 million shares, rejects IPO path
CEO Brad Garlinghouse emphasizes liquidity over IPO in the current regulatory climate in the US.
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Ripple Labs, the company behind the Ripple blockchain and the issuer of the XRP token, is set to buy back $285 million worth of shares from its initial investors and employees. This repurchase values the company at $11.3 billion, allowing investors to sell up to 6% of their stake, as per information given to Reuters by sources close to the matter.
Ripple has confirmed a plan to repurchase shares strategically to offer its investors some liquidity. The company anticipates spending as much as $500 million in this plan, including taxes and stock conversion.
Ripple’s CEO, Brad Garlinghouse, explained that the focus is on investor liquidity rather than an imminent Initial Public Offering (IPO) due to the current regulatory uncertainties in the US.
IPOs are commonly associated with traditional financial and technology companies in the United States. Nonetheless, the crypto industry has seen a few companies take the IPO path. A landmark moment was Coinbase’s NASDAQ listing in 2021, which closed on its first day of trading at an $85 billion valuation.
Garlinghouse stated that:
“Growing in the headwinds of the SEC lawsuit was certainly a challenge, but 95% of our customers are non-US financial institutions.”
The Ripple decision comes following a significant legal victory on July 13, 2023, against the US Securities and Exchange Commission (SEC), where a judge ruled that sales of XRP on public exchanges were not unregistered securities offerings.