The recently published Hinman documents in the legal battle between Ripple Labs and the US Securities and Exchange Commission (SEC) have caused quite a stir and strengthened the XRP military’s belief that the fintech will prevail against the regulator. However, what has attracted little attention are the documents and emails that Ripple has been forced to release.
One issue is of particular importance. Recently, the “XRP buyback” theory made headlines again. In recent days, there has been a lot of speculation about a possible buyback of 10 billion XRP tokens by Ripple Labs. However, Ripple’s Chief Technology Officer (CTO) David Schwartz quickly put an end to these speculations. In an illuminating tweet, Schwartz wrote:
We sometimes buy XRP. But I don’t know anything specific what this could refer to. And no official source is mentioned.
Ripple emails reveal musings on XRP buyback
While the XRP buyback theory (propagated by Valhil Capital CEO Jimmy Vallee) has been dismissed as absurd by Ripple executives several times in the past, recently declassified documents and emails show that the fintech firm XRP- buybacks considered raising the price even in the short term. before the SEC lawsuit in June 2020.
In an email from Breanne Madigan, VP Head of Global Institutions Markets at the time, she said shared a presentation regarding XRP-O (On Demand Liquidity) supply issues and the impact on price. The presentation states that there are three possible stories:
First, regardless of the source, the supply of XRP has a similar impact on the market. Second, Ripple’s XRP offering has a greater impact on the market, possibly through increased visibility. Third, Ripple theorizes that On-Demand Liquidity’s XRP offering has the biggest impact on the market, possibly due to higher visibility, lower neutral liquidity, and wider spreads.
The third scenario, according to the presentation, is the most likely and also the reason why XRP has been underperforming BTC since the halving in early May 2020. Ripple writes that XRP sales through XRP-O have led to negative pressure on the XRP price. It also states that buybacks can directly dampen the impact of XRP-O sales.
In total, the fintech company is setting up five possible buyback options for XRP-O, each with a trial period of one to three months. These are:
(a) Buy back XRP through market makers (MMs) on multiple exchanges
(b) Buy back XRP directly from MMs
(c) Buy back XRP on xxxxx through MMs
(d) Reduce XRPO volumes and route/channel them to traditional ODL
(e) Stop XRPO altogether
Jimmy Valhills #XRP buyback theory is extremely controversial. BUT:
Recent #Ripple emails from the SEC lawsuit show: the company was considering buybacks in June ’20 (several months before the lawsuit) to support the XRP price.
What would have happened without the lawsuit? #XRPArmy pic.twitter.com/FkPAatVyhG
— Jake Simmons (@realJakeSimmons) June 26, 2023
The recommendation of the creators of the presentation is option b) that Ripple buy back XRP directly from MMs (short-term plan). In the long run, the team recommended that Ripple form a new company and develop internal expertise.
Related reading: “Ripple (XRP) is a must-hold for the next bull run,” says Bitcoin Maxi
What the plans would have become without the SEC complaint can only be speculated. However, the documents show that Ripple is definitely considering XRP buybacks (but probably not as Valhil theorizes).
A stumbling block for Ripple?
However, popular Twitter user @JayVTheGreat has also pointed to a negative revelation of Ripple’s emails. He writes, “Don’t fool yourself and don’t let anyone fool you into thinking that #ripple wasn’t #xrp marketing for speculators/retailers.”
He refers to an email from Monica Long, Ripple’s current general manager. In the email, Long writes that: “it is clear that we will have to put our energy into attracting speculators in the short term.” The statement is critical because Ripple has always denied advertising XRP as a speculative investment.
Don’t fool yourself and don’t let anyone fool you into thinking that #ripple wasn’t marketing #xrp to speculators/retailers.. pic.twitter.com/9GRgLCiA4d
— Jay’V
(@JayVTheGreat) June 25, 2023
At the time of writing, XRP price was at $0.4827, consolidating below the main resistance zone around $0.50.
Featured image from iStock, chart from TradingView.com
