Ripple Labs, the San Francisco-based cryptocurrency payments firm, is set to repurchase $285 million worth of shares from early investors and employees to bolster its financial position. This transaction, termed a tender offer, propels Ripple’s valuation to an impressive $11.3 billion, according to two anonymous sources cited by Reuters.
The buyback initiative allows investors to sell a maximum of 6% of their stakes in the privately held company. The company, confirming the tender offer, revealed plans to allocate $500 million for the share repurchase, covering expenses related to converting restricted stock units into shares and addressing associated taxes.
Brad Garlinghouse, Ripple’s Chief Executive, disclosed the company’s intention to conduct regular share buybacks, emphasizing the objective of providing liquidity for investors. Contrary to expectations, Garlinghouse asserted that the company has no imminent plans to go public in the United States, citing regulatory uncertainties as a primary deterrent.
Garlinghouse highlighted the financial strength of the company, noting holdings exceeding $1 billion in cash and over $25 billion in various cryptocurrencies, predominantly XRP coins. This move follows Ripple’s recent legal triumph in an extended legal battle with the U.S. Securities and Exchange Commission (SEC). The U.S. District Judge ruled that the sales of XRP on public exchanges did not qualify as unregistered securities offerings, marking a partial victory for Ripple.
Recent Ruling Favors Ripple in SEC Lawsuit
Founded in 2012, Ripple Labs specializes in developing a payment system designed to facilitate seamless cross-border transactions, with a focus on promoting the use of its native XRP coins. The company had previously acquired the Switzerland-based crypto custody firm Metaco for $250 million in May.
Despite a setback in December 2020, when the SEC filed a lawsuit against Ripple and its executives for allegedly conducting unregistered securities offerings through the sale of XRP, the recent legal ruling has provided a reprieve for the company.
Brad Garlinghouse acknowledged the challenges posed by the SEC lawsuit, stating, “Growing in the headwinds of the SEC lawsuit was certainly a challenge, but 95% of our customers are non-US financial institutions.” However, he declined to disclose the size of Ripple’s payment business.
However, the company’s strategic financial moves and robust balance sheet reflect a resilient company in the face of regulatory uncertainties, paving the way for potential future growth and stability in the cryptocurrency market.
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