- Ripple’s CEO has revealed that the sales of XRP token maintain the company’s profitability.
- Furthermore, it became known that Ripple has payed $11 million in XRP to MoneyGram to use its products.
In an interview with the Financial Times, Ripple’s CEO has talked about the programmatic sales of the XRP token. According to Brad Garlinghouse, the company remains profitable by selling the token. The revenue from these sales represent a large portion of Ripple’s revenue:
(Without selling XRP) we would not be profitable or cash flow positive. Well XRP is one source. I don’t know how to answer that because if you took away our software revenues, that would make us less profitable. If you took away all our XRP, that makes us less profitable. So I don’t think about it as one thing.
The programmatic sales of XRP are part of Ripple’s funding program. In the crypto community, however, the program has come under criticism. Some users claim that the XRP sales increase the pressure on the price and impact it negatively. Analyst Luke Martin reacted to Garlinghouse’s statements by saying that Ripple is dumping XRP at the cost of XRP users. In response, another Ripple community member Galgitron said:
Speaking of Ripple’s sales, do you know that Ripple has practically stopped selling for months now?
This is confirmed by the last quarterly report and statements from Jeb McCaleb, co-founder of Ripple. According to these the volume of XRP sold is too low to significantly affect XRP price. Although McCaleb has also been pointed out for putting pressure on the XRP. Stellar Lumens’ current CTO has sold over a billion XRPs since 2014.
Ripple pays MoneyGram for using On Demand Liquidity
Ripple’s CEO also made a controversial revelation. According to Garlinghouse the company “incentives” its clients to use Ripple’s products. The incentives are XRP payments that the company makes to its clients, depending on the priority they have:
The Company is compensated by Ripple in XRP for developing and bringing liquidity to foreign exchange markets, facilitated by the ODL [Ripple’s On-Demand Liquidity] platform, and providing a reliable level of foreign exchange trading activity. We refer to this compensation as market development fees.
Garlinghouse’s claims are confirmed by a document from its partner MoneyGram. The remittance company filed a 10-K form with the U.S. Securities and Exchange Commission. In the document, MoneyGram reports its 2019 financial results. There it is revealed that MoneyGram received $11.3 million from Ripple in XRP. The total amount was received in two separate payments, as MoneyGram claims:
(…) Ripple financial benefit of $8.9 million in the fourth quarter and $2.4 million in the third quarter is now accounted for as offset to operating expenses (…).