Crypto payments company Ripple Labs announces $285M stake buyback plans

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Ripple Labs, the cryptocurrency company famous for XRP coins, announced its plans to repurchase $285 million worth of company shares from early investors and employees.

Reuters revealed the news on X, saying, “Ripple to buy back $285 million of its shares, valuing company at $11 bln.”

Sources familiar with the matter said that investors would only be able to sell up to six percent of their holdings in Ripple through the tender offer. The company has raised nearly $300 million in funding over 14 rounds since 2015, according to Crunchbase.

Ripple has confirmed the buyback plan and said it would spend $500 million to facilitate the conversion of restricted stock units into common shares and cover taxes.

“We are committing $500 [million] of cash from the balance sheet to convert RSUs and buy back shares – purchasing up to $285 [million] of equity and committing over $200 [million] to convert RSUs. This is at an equity valuation of over $11 [billion],” a Ripple spokesperson said.

Ripple currently holds over $25 billion in cryptocurrency — mostly XRP — and has over $1 billion in cash assets, per CEO Brad Garlinghouse.

According to CoinTelegraph, Ripple intends to do more buybacks to give early investors a way to cash out. Garlinghouse stressed that Ripple has no plans to go public in the U.S. anytime soon because of the unclear regulatory environment.

This buyback initiative allows investors to sell their shares back to Ripple rather than going through a public stock offering. The company can cash out investors on its terms, avoiding the challenges of being a public company.

“Growing in the headwinds of the SEC lawsuit was certainly a challenge, but 95% of our customers are non-US financial institutions,” Garlinghouse said.

Ripple’s decision to do a buyback instead of an IPO allows it to keep control and flexibility. If it had gone public, it would have had to deal with more regulations, stock volatility and investor pressures.

Ripple wins legal battle against SEC

Ripple has been in a legal dispute with the U.S. Securities and Exchange Commission (SEC) since December 2020.

In July 2023, a key development occurred when the court ruled that XRP isn’t a security in its regular sales on exchanges.

“Therefore, having considered the economic reality and totality of circumstances, the Court concludes that Ripple’s Programmatic Sales of XRP did not constitute the offer and sale of investment contracts,” the court notes said.

U.S. District Judge Analisa Torres ruled that Ripple’s programmatic or automated sales of the XRP token are not securities. Judge Torres also ruled that Ripple’s institutional sales of XRP do count as unregistered securities offerings.

“Since 2017, Ripple’s Programmatic Sales represented less than 1% of the global XRP trading volume. Therefore, the vast majority of individuals who purchased XRP from digital asset exchanges did not invest their money in Ripple at all,“ the court notes read.

The SEC tried to appeal a decision last year but was denied in October. Judge Torres also rejected the SEC’s plea to delay the trial.

Charges against Ripple’s CEO Brad Garlinghouse and former executive Christian Larsen were dropped. They were accused of helping violate securities laws in connection with XRP sales.

Ripple chief legal officer Stuart Aldeorty shared his view on the charges, saying, “The SEC made a serious mistake going after Brad & Chris personally – and now, they’ve capitulated, dismissing all charges against our executives. This is not a settlement. This is a surrender by the SEC.”