An S&P 500 and XRP exchange-traded fund (ETF) prospectus filed with the U.S. Securities and Exchange Commission (SEC) by Cyber Hornet identifies market manipulation by whales as one of the primary risks associated with the digital asset. According to the filing, all 100 billion XRP tokens in existence were created at the time of the XRP Ledger’s launch in 2012.

Explaining why this and the subsequent distribution of XRP tokens remain a risk to investors seeking exposure to the digital asset, the filing states:

“A small number of holders hold a significant portion of XRP, sometimes called ‘whales.’” Transactions by these holders may influence the price of XRP, and these holders may be able to manipulate the price of XRP. For example, of the 100 billion XRP generated by the XRP Ledger’s code, the founders of Ripple Labs Inc., a corporation incorporated and existing under the laws of Delaware (“Ripple Labs”), retained 20 billion XRP, and the remaining 80 billion XRP were initially allocated to Ripple Labs.”

Although this history of XRP’s creation and distribution has been publicly known for years, critics argue that Cyber Hornet’s decision to formally acknowledge it is significant. One such critic, Bill Morgan, said Cyber Hornet’s admission puts pressure on those who routinely deny market manipulation allegations.

“If an institutional applicant for an ETF acknowledges the risk of whale manipulation then it should be considered a real risk. Personally, if people are not prepared to acknowledge the possible risk of some market manipulation in crypto, I wonder whether they should invest in the space at all,” Morgan said in a post on X.

Others contend that Cyber Hornet’s acknowledgment shows institutions are taking the manipulation risk seriously. However, XRP supporters dismiss the market manipulation reference as “boilerplate language” commonly found in traditional finance prospectuses. Some insist that talk of whale manipulation will fade “once institutional buying takes over.”

Cyber Hornet’s proposed S&P 500 and XRP 75/25 Strategy ETF is one of three filed with the SEC on Sept. 26. The other two are the Cyber Hornet S&P 500 and Ethereum 75/25 Strategy ETF and the Cyber Hornet S&P 500 and Solana 75/25 Strategy ETF. Like the XRP filing, both also acknowledge risks associated with ETH and SOL.

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