Ripple CTO David Schwartz Confronts Buyback Rumours

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By Jody McDonald January 09, 2024 In Ripple, XRP

Despite a history of strategic token buybacks, David Schwartz says Ripple’s plan is to reduce its XRP holdings as quickly as possible.
Rumours of a USD $200 million XRP buyback began in December ‘23 following significant growth of On-Demand Liquidity driving increased token sales.
A buyback of this scale could increase XRP price by 30-60% over a few days.

Ripple’s Chief Technical Officer, David Schwartz, has dampened persistent rumours of a looming large-scale XRP buyback, saying the company only has two options: maintain its XRP holding at current levels or reduce them.

The rumours of a large impending XRP buyback started in early December when prominent crypto influencer Mr. Huber suggested on X that a significant buyback may be imminent based on an analysis of XRP sales and Ripple’s past behaviour.

Why Was an XRP Buyback Predicted?

In early December Mr. Huber predicted Ripple would buy back around USD $200 million (AUD $297 million) of XRP before the end of December, following significant growth in the company’s On-Demand Liquidity (ODL) service, which fuelled a large increase in XRP sales.

Predictions of a buyback may seem unusual, but Ripple actually has a history of buying back tokens. The company has often followed a pattern of selling large amounts of XRP through its ODL service, then buying back XRP towards the end of each fiscal quarter to strategically balance quarterly net sales of XRP.

Given the scale of the growth in ODL last quarter, a larger than usual buyback seems possible. Mr. Huber predicted that if he was right about the scale of this quarter’s buyback it could trigger a 30-60% price spike over a few days.

The timeframe for Mr. Huber’s initial prediction has now passed and there’s been no indication Ripple has bought any XRP.

However, he still believes a large buyback is imminent based on XRP sales volume and Ripple’s past behaviour, saying in an X post “there you have it: Ripple’s net XRP sales reached almost 238 million XRP in December. That’s $142 million. That’s three times the average monthly sales”.

He doubled down on his prediction in a subsequent post:

We can assume that Ripple will make a large buyback soon, otherwise I would be worried. Because there has never been a period longer than 8-10 weeks without a single net buyback.

Mr. Huber

Ripple CTO Rains On Parade

After weeks of social media speculation, Ripple’s CTO, David Schwartz, yesterday decided to weigh in and gave the XRP community something of a reality check.

Responding to an X post, Schwartz said:

Ripple has two options. We can continue to hold as much XRP as we have, or we can reduce the amount of XRP we have. There really is no third option. Ripple’s original plan was to reduce the amount of XRP we hold as quickly as possible.

David Schwartz, Ripple CTO

While this statement doesn’t eliminate the possibility of future XRP buybacks, it does suggest very large buybacks are unlikely as the company looks to rapidly reduce its XRP holdings.

Schwartz also took the opportunity to stamp-out speculation of a potential token burn, responding to a question about conducting an escrow burn with: “I can’t think of any sequence of events that would lead to this happening. And I don’t think it would do any real good.”