The question on Ripple’s valuations and its XRP holdings came after XRP jumped over $1 despite the ongoing legal battle with the US SEC.
The valuation of Ripple is around $2 billion to $3 billion in the secondary market, but its total XRP holdings are reportedly worth about $70 billion. Ripple’s XRP holdings are much larger than the firm’s total equity. At press time. XRP has declined 6.17% to $1.34 in the last 24 hours. Also, the crypto asset has dropped more than 41% over the same period.
Crypto Investor Questions Company’s Valuation vs Ripple’s XRP Holdings
Ex-hedge fund manager, crypto investor and CEO of Galaxy Digital Michael Novogratz commented on the discrepancy between Ripple’s value and its XRP holdings.
Well, $62 bn of the XRP in Ripple's balance sheet is locked in escrow.
At the same time, Ripple's XRP sales are the ones under attack from the SEC so the market probably hasn't priced in Ripple's XRP holdings since they are in limbo right now.
— Leonidas (@LeoHadjiloizou) April 10, 2021
Novogratz’s tweet has attracted thousands of likes and several comments. A long-time crypto researcher, Leonidas Hadjiloizou, replied to Novogratz’s question on Twitter. According to Hadjiloizou, $62 billion out of the $70 billion worth of XRP held by Ripple “is locked in escrow.” In that case, the XRP holdings will not be included in the company’s equity until they start unlocking.
Ripple’s Escrow to Unlock Over 55 Months
In December 2017, Ripple published a note to explain the “Ripple’s XRP Escrow.” At the time, the company said XRP had locked 55 billion XRP into a series of escrow. In the note, Ripple explained that 1 billion XRP would be unlocked each month for the next 55 months. Ripple further explained the purpose for the escrow:
“This provides an upper limit on the amount of new XRP that can be brought into circulation. The amount of XRP actually released into the circulation will likely be much less than this. Any additional XRP leftover each month will be placed into a new escrow to release in the first month in which no escrow currently releases.”
With the amount of XRP Ripple holds, the company’s current worth will be considered undervalued upon the total unlocking of its balance sheet and if XRP value does not decline.
XRP Grows Over $1 for the First Time in 37 Months
The question on Ripple’s worth, compared to the valuation of its XRP holdings, came after XRP jumped over $1 despite the ongoing legal battle with the US Securities and Exchange Commission (SEC).
On the 6th of April, XRP crossed $1 for the first time since March 2018. As a result of the new milestone, the digital asset’s valuation moved to about $47 billion.
According to analysts at Santiment, the XRP surge can be tied to its growing social volume. Since the beginning of April. XRP has spiked about 160% and has traded as high as $1.49.
Cointelegraph referred to the Ripple’s victories in its legal battle as a major catalyst for the 160% surge.