Ripple CTO David Schwartz has provided an explanation for Ripple’s decision to sell its XRP holdings. The ongoing legal dispute between Ripple and the SEC is still a major development. The criticism surrounding Ripple’s frequent sales of XRP tokens has prompted Schwartz to clarify the company’s strategy.
Schwartz’s remarks were made in response to concerns about Ripple’s sales approach and its significant holdings of XRP. According to Ripple’s Q1 2024 report, there are two main categories of XRP: liquid and available XRP in Ripple’s wallets, and XRP locked in escrow accounts that are scheduled to be released over a regulated period of 42 months.
As of March 31, 2024, Ripple directly held 4.8 billion XRP coins, while 40.1 billion XRP were held in escrow. Each month, a portion of the escrowed XRP is released, but the majority is returned to restart the escrow clock.
Schwartz explained that selling the coins was the only practical way for Ripple to obtain liquidity from its XRP holdings, other than letting them sit indefinitely. The company has no plans to significantly increase or decrease sales.
In response to Schwartz’s disclosures, an anonymous cryptocurrency researcher named Darkhorse advised Ripple to reconsider its tactics. One recommendation was to temporarily halt sales to assess the impact on pricing. However, Schwartz emphasized the importance of transparency in Ripple’s operations and stated that intentional price manipulation would be unethical.
Some commenters raised concerns about the potential negative effects of Ripple’s substantial XRP holdings on network initiatives. However, the significant increase in XRP Ledger transactions in the first quarter of 2024 suggests that this is not currently an issue.
The legal dispute between the SEC and Ripple remains unresolved, with Ripple recently filing a response to the regulator’s request for a $2 billion penalty. Ripple argues that the penalty is excessive, as there were no allegations of recklessness or fraud against the company.
Despite the ongoing legal battle, XRP has performed well in the market, with the price currently at $0.5356, representing a 4.42% increase over the previous day and a bullish position of 6.01% over the last seven days.
The SEC has faced criticism for its actions against cryptocurrency companies, with Coinbase’s chief legal officer suggesting that the regulator may have abused its authority. This has raised doubts about the credibility of the SEC’s claims.
