Ripple Labs, the blockchain company behind XRP coin, is set to repurchase $285 million worth of shares from its early investors and employees. This move, described as a tender offer, places the company’s valuation at $11.3 billion.
Sources familiar with the matter, who chose to remain anonymous, told Reuters that investors are limited to selling up to 6% of their stake in the company. Ripple Labs, while confirming the tender offer, stated its plan to allocate $500 million for the buyback. This amount will be used to cover the costs associated with converting restricted stock units into shares, as well as for tax-related expenses.
Ripple CEO Brad Garlinghouse clarified that the company has no immediate plans for a public offering in the United States, primarily due to the ongoing regulatory uncertainties. He highlighted Ripple’s strong financial position, noting that it holds over $1 billion in cash and more than $25 billion in crypto assets, predominantly in XRP coins. As of Wednesday, XRP’s market capitalization stood at $30 billion, according to CoinMarketCap.
This buyback initiative comes in the wake of Ripple’s partial victory in a prolonged legal battle with the U.S. Securities and Exchange Commission (SEC). A U.S. District Judge ruled that sales of XRP on public exchanges did not constitute unregistered securities offerings, providing some legal clarity for the firm.
Ripple, founded in 2012, focuses on developing a payment system that facilitates cross-border transactions and promotes the use of its XRP token. In May 2022, the company expanded its operations by acquiring Metaco, a Switzerland-based crypto custody firm, for $250 million.
“Growing in the headwinds of the SEC lawsuit was certainly a challenge, but 95% of our customers are non-US financial institutions,” Garlinghouse stated, without disclosing the size of Ripple’s payment business.
The company’s plans for future share buybacks are said to provide liquidity to investors, while its expansion efforts continue, particularly in Europe and Africa.