Ripple CTO David Schwartz intervened in a discussion on X regarding a planned buyback by Ripple.
Ripple CTO David Schwartz intervened in a discussion on X regarding a planned buyback by Ripple.
Days ago, reports emerged that Ripple would buy back company shares worth $285 million from early investors and employees.
The investment, known as a takeover bid, valued the company at $11.3 billion. Investors can only sell up to 6% of their property, Reuters quoted from anonymous sources. The planned buyback will cost $500 million to cover the cost of converting restricted stock units into stock and taxes.
In the coming days, Ripple intends to conduct more stock buybacks regularly to provide liquidity to investors, and has no plans to go public in the United States anytime soon due to regulatory uncertainty.
The planned buyback, as well as the fact that Ripple has decided not to conduct an initial public offering (IPO), has sparked a lengthy debate on Twitter. Former Ripple developer Matt Hamilton wonders if Ripple would make any profit if it held an IPO.
Hamilton believes it wouldn’t make any functional difference because most companies raise funds through IPOs. He also believes that Ripple does not need to raise funds.
Ripple CEO Brad Garlinghouse revealed that the company had over $1 billion in cash and over $25 billion in cryptocurrency, predominantly XRP coins, on its financial sheet.
Ripple CTO David Schwartz jumped into the discussion on X about the buyback and stated that employees care that their stock options have a path to liquidity. Therefore, there is no reason why they should be specifically listed stocks.
Responding to a user’s question about why Ripple is buying back the shares if there is such a liquid market, Schwartz responded in the negative, saying that there is “really” no liquid market. He stated that the share market for private companies is largely illiquid.
