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Ripple’s
recent $500 million share sale attracted top Wall Street investors, but its structure showed just how carefully traditional finance now treads in digital
assets.
Citadel
Securities, Fortress Investment Group, Marshall Wace, Brevan Howard, Galaxy
Digital, and Pantera Capital participated in the November round. The deal
valued Ripple at $40 billion, a record for a privately held crypto company.
Several
funds assessed that at least 90% of Ripple’s net asset value is derived from XRP,
the cryptocurrency closely tied to the company, Bloomberg reported, adding that Ripple held $124 billion worth
of XRP as of July. Much of that remains locked up and releases gradually.
Volatile
Market Tests Valuations
Investors reportedly negotiated the right to sell shares back to Ripple after three or four years and received a guaranteed 10% annualized return. If Ripple forces a buyback,
the return jumps to 25%. A liquidation preference clause gives new shareholders
priority over existing ones in a sale or bankruptcy.
XRP has since dropped roughly 40% from its mid-July peak, with the token falling about 16% since late
October, when Ripple announced the funding. The decline came during the
sharpest crypto selloff since 2022.
Despite the
drop, Ripple’s XRP holdings still exceed the company’s valuation. The treasury
stood at $83.3 billion as of early December, assuming no changes since July. Ripple would
owe investors $732 million if it repurchases shares after four years at the
guaranteed rate, according to Bloomberg calculations.
Broader
Crypto Funding Wave
Meanwhile, the payments-focused platform
has since expanded through acquisitions this year. It acquired treasury software provider GTreasury for $1 billion in October. These moves could reduce XRP’s weight in
Ripple’s overall valuation over time.
Recently, Ripple expanded its institutional services in the U.S. with the launch of its digital asset spot prime brokerage offering, giving professional investors a single platform to trade, clear, and finance their crypto positions. The rollout followed the company’s integration of Hidden Road, the multi-asset brokerage it acquired earlier this year and has since rebranded as Ripple Prime.
Under the Ripple Prime banner, institutional clients in the U.S. can now execute OTC spot transactions across a wide range of digital assets. The service also covers trades involving XRP, Ripple’s native token, as well as its U.S. dollar-backed stablecoin, RLUSD.
This article was written by Jared Kirui at www.financemagnates.com.
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