Investors Are Looking to Offload Ripple Equity Below December's $10B Valuation

In December, Ripple announced it had completed a $200 million Series C funding round. Garnering support from investors such as SBI Holdings and Tetragon, the financial technology firm purportedly secured funding at a valuation of $10 billion. 

A source now tells the BTC Times that two investors in Ripple are attempting to privately offload equity at a steep discount to the aforementioned valuation. This comes despite a 50% increase in the market price of the cryptocurrency XRP — one of Ripple's major holdings. 

Ripple Isn't Worth $10 Billion in the Eyes of Some of Its Investors

Ripple became one of the most valuable cryptocurrency companies in December 2019 when Fortune reported it raised $200 million at a $10 billion valuation. Coinbase, by comparison, was valued by investors at $8 billion when its last funding round took place in late 2018. And the ASIC manufacturer Bitmain was reported by Chinese media in 2019 to have been valued in excess of $15 billion. 

In an announcement regarding the Series C round, Brad Garlinghouse, chief executive of the company, restated Ripple's position and vision: 

“We are in a strong financial position to execute against our vision. As others in the blockchain space have slowed their growth or even shut down, we have accelerated our momentum and industry leadership throughout 2019." 

A source that wishes to remain anonymous tells the BTC Times that at least two investors in Ripple, one being an "early-stage" investor, are looking to exit their positions below December's valuation. The source is familiar with the investors looking to liquidate their equity in the company. 

"I have access to two blocks of Ripple [equity] at a substantial discount to the last fund raise," they commented. 

These two blocks are purportedly being sold by an American investor and Chinese investor at a 35-40% discount to the valuation given to Ripple by Series C round investors. This implies the company has an over-the-counter valuation of $6-6.5 billion. 

Ripple made large investments in MoneyGram and formed numerous partnerships over 2019, leveraging its "strong balance sheet." The company owns approximately 10% of MoneyGram's common shares and has a commitment to purchase up to $30 million more of the securities in the future. 

Ripple May Want to Go Public—But Is it Ready?

The attempted sale of this equity comes as Ripple has purportedly begun preparations for an initial public offering. 

Speaking to the Wall Street Journal at the World Economic Forum 2020 in Davos, Switzerland, Garlinghouse said it's a "natural progression" for Ripple to become a publicly-traded company. Garlinghouse added that he wants the company to be on the “leading side” of cryptocurrency firms going public. 

Compound's general counsel Jake Chervinsky has suggested that due to the uncertainty about the regulatory status of XRP, an IPO may only take place at a later point in time:

"I'm sure Ripple's thinking about an IPO (like many Series Cs). I just doubt it'll happen while XRP's security status remains uncertain. That's not 'FUD,' it's basic business sense."

The attempts by investors to offload their equity after Garlinghouse hinted at an eventual IPO may suggest Ripple equity holders are not confident the company is ready to go public in the near future. This uncertainty may be fueled by XRP’s unclear security status.