Ripple Labs is participating in a tender offer to repurchase a stake of the firm from early investors. The firm is planning to repurchase a $285 million stake in the form of a tender offer at a time when the evaluation is reported around $11.3 billion.
The tender offer will grant employees and other investors to sell their stake back to Ripple Labs administrators as per a Reuters report. As per a media briefing, Ripple’s spokesperson claimed that the firm has allocated a budget of $500 million. This budget is also inclusive of the cost of restricted stock unit conversion into common shares.
The article published in Reuters noted that investors will be able to sell up to 6% of their individual holdings. The firm further notified investors that based on the tender offer, the evaluation of the firm will reach $11.3 billion. Ripple’s account on Crunchbase indicates $298.8 million in funding during 14 rounds starting from 2015.
The firm further noted that at present the total cryptocurrency reserves at the organization are valued around $25 billion in the form of XRP tokens. At the same time, the firm holds around $1 billion in the form of cash in commercial reserves as per Chief Executive Officer Brad Garlinghouse.
Tender Buyback Offer
Ripple CEO Garlinghouse noted that early investors have a chance to sell their Ripple holdings to the firm based on the tender offer. He further stated that the firm has plans to go for a public listing in United States to combat the uncertain regulatory environment.
The buyback strategy is an alternative stock trading option for early investors. Before the firm opts to become a publicly listed company. If the investors opt to retain their existing stakes, they will have to opt for a liquidity option during the upcoming Initial Public Offering (IPO).
The firm noted that in case the investors opt for the buyback offer they will be able to retain greater control and flexibility over their equity. In contrast, in the event of a public offering, the investors will have to account for additional regulatory implications such as market volatility and requirements from new investors.
On the other hand, the investors who are going for the buyback option will be able to deal with investors while circumventing the complications that are associated with a publically traded firm. Garlinghouse also noted that around 95% of the current investors are non-US financial firms.
SEC Requests Court to Direct Ripple for Issuing Financial Statements
SEC recently added a directive in court to compel Ripple to produce financial statements from 2022 to 2023. The motion also requires the firm to share post-complaint contracts regarding all institutional sales for the duration.
This move is in line with the decision of the court in July 2023 that posits that XRP only constituted security when sold to institutional investors. The specified discovery requirement holds Ripple liable for breach of Section 5 under the Securities Act of 1933.
SEC lawyers recommended injunction relief and civil penalties in accordance with the sales amount. Meanwhile, the SEC has also brought lawsuits against Coinbase and Binance. The federal agency started legal proceedings against the firm in 2020 for dealing in unregistered securities. However, SEC officials notified the courts in October 2023 to drop the charges against executives namely Brad Garlinghouse and Chris Larson.