Ripple's $500 Million Raise Shows Wall Street Caution With Its XRP-Heavy Holdings

Source: CryptoBriefing Original Title: Ripple’s $500 million raise shows Wall Street caution with its XRP-heavy holdings: Report Original Link:

Key Takeaways

• Ripple completed a $500 million share sale with profit-guaranteeing terms for some investors.
• Ripple’s valuation is closely tied to its large XRP holdings, but the company is expanding into other financial services.

Main Content

Ripple’s latest fundraise at a $40 billion valuation drew elite investors, but the terms reveal great caution about the risks in the crypto sector.

As reported, investors have negotiated a set of terms that allow them to sell their shares back to Ripple after three or four years at a higher predetermined price, effectively guaranteeing profits unless the company goes public before that point.

If Ripple chooses to repurchase the shares instead, it would be required to pay an annualized return of 25%.

Citadel Securities and other major funds such as Fortress Investment Group, Marshall Wace, Brevan Howard, Galaxy Digital, and Pantera participated in the financing round with these profit-protection provisions.

Many investors believe Ripple’s value is anchored almost entirely to XRP, which the company held at $124 billion as of July. The coin has dropped considerably during the latest crypto market downturn. These conditions could create major financial obligations for Ripple in the future as it works to reduce its dependence on a single token.