The shadow of the SEC lawsuit has finally lifted, and Ripple Labs, which has long positioned itself as a blockchain payment company but has had little actual business, is finally on a path of acquisition, moving towards building a multi-billion dollar, genuine cryptocurrency empire.

Author: Forbes

Ripple Labs CEO Brad Garlinghouse.

Image Source: Stephen McCarthy/Sportsfile/Collision/Getty Images

In March 2024, we published a report on "zombie blockchains," listing at least 50 cryptocurrency projects with a market capitalization exceeding one billion dollars, primarily supported by speculation rather than actual applications. Ripple, which aimed to replace the global banking information service system SWIFT but has yet to achieve its ambitions, topped the list. At that time, its market capitalization was $36 billion, yet its annual transaction fee revenue was only $583,000.

However, Ripple Labs has recently shown rapid development momentum.

In the private equity market, the company's stock price currently fluctuates between $135 and $170, increasing about 2 to 3 times since the beginning of the year, with a valuation between $22 billion and $30 billion. For reference, this valuation is close to that of stablecoin issuer Circle. Ripple aims to compete with Circle and even attempted to acquire it before its IPO in June. Currently, Circle's valuation is about $34 billion, and its stock price has risen 352% since its IPO on June 5. Ripple's token XRP (which does not grant holders ownership of the company) has increased by 366% this year, with a market capitalization nearing $150 billion.

Ripple is now also riding the wave of the digital asset treasury trend.

In recent weeks, several companies have announced treasury strategies involving XRP, the most notable being Evernorth, which plans to raise over $1 billion. A company that has long struggled to make business progress now has enterprises willing to consider holding its tokens, demonstrating their immense trust in Ripple.

With the conclusion of Ripple's five-year legal dispute with the SEC, such a shift is not surprising.

In 2020, the SEC sued Ripple, accusing it of selling XRP as an unregistered security, resulting in Ripple paying a $125 million fine. Additionally, Ripple has completed several high-profile acquisitions: acquiring treasury management software provider GTreasury for $1 billion, acquiring prime broker Hidden Road for $1.25 billion, and acquiring stablecoin payment platform Rail for $200 million. Between 2023 and 2024, Ripple also acquired digital asset custody company Metaco for $250 million and Standard Custody (the acquisition amount was not disclosed).

Although in terms of application usage and developer activity, the XRP Ledger still lags behind other more popular blockchains, it is evident that Ripple today is vastly different from a year ago.

"Sometimes people think change is a bad thing, but I believe it is precisely a sign of healthy development and striving for excellence, especially in emerging technology fields," said Joe Naggar, CEO and Chief Investment Officer of cryptocurrency hedge fund Feynman Point Asset Management, which is also an investor in Ripple.

He added, "Ripple has a meticulous consideration of its capital structure, which has not been fully reflected due to regulatory pressure in the past. I believe Ripple vividly demonstrates how a company can develop without a harsh legislative and regulatory environment. This careful consideration also distinguishes Ripple from other protocols with large treasuries—those protocols lack true leadership and clarity on who they serve. But if you ask Brad Garlinghouse (Ripple's CEO), his answer will be very clear: serving the shareholders."

Naggar believes that if one were to find a reference point for Ripple today, it should not be Circle or other blockchain companies, but Coinbase. Coinbase also engages in custody and prime brokerage services and has a revenue-sharing agreement with Circle.

Austin King, CEO of cryptocurrency trading company Nomina (who sold his first company to Ripple in 2019), has a more pronounced view: "There are many people in the cryptocurrency space who have criticisms of Ripple, but the fact is, Ripple has incredible foresight. Their technology has been around for a decade. I believe Ripple's current bet is to find synergies among these different businesses and integrate them into a comprehensive financial services group."

Therefore, Ripple's next major question is whether it can integrate the acquired businesses into a unified system, thereby truly creating value for its core technology—the XRP Ledger.

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