The company behind the world’s fourth largest crypto is reinventing itself as a conglomerate. Two of Wall Street’s savviest firms, Fortress and Citadel Securities, are backing it.
Crypto conglomerate Ripple has raised $500 million at a $40 billion valuation, led by funds tied to Fortress Investment Group, Citadel Securities as well as Pantera Capital, Galaxy Digital, Brevan Howard and Marshall Wace.
The deal follows a $1 billion tender offer at the same valuation and lifts cofounder Chris Larsen’s net worth to an estimated $13.8 billion, up from $10.2 billion. CEO Brad Garlinghouse also joins our billionaire ranks, with an estimated $3.5 billion fortune based on a 6% stake in the company and XRP holdings. Arthur Britto, one of the XRP Ledger’s creators, is likewise a billionaire: he holds at least 1.3 billion XRP in wallets tracked by Gray Wolf Analytics, valued at roughly $3 billion.
“The decision to accept $500 million in new common equity reflects the strategic value of deepening relationships with financial partners whose expertise complements Ripple’s expanding global suite of products,” the firm said in a statement Wednesday.
Ripple didn’t need the money. It sits on about 35 billion XRP, worth roughly $80 billion at Wednesday’s $2.27 price. Those tokens, representing more than 30% of XRP’s total supply, are released from escrow each month, giving Ripple one of the most lucrative self-funding mechanisms.
The company initially pitched XRP as a “bridge currency” to replace SWIFT and streamline cross-border payments. It won splashy partnerships, including with MoneyGram in 2019, yet struggled to convert attention into sustained usage. Last year, it earned a spot on Forbes’ list of “zombie blockchains”, decentralized projects with grossly inflated valuations despite limited adoption and scant transaction revenue.
Then came the regulators. In 2020, the U.S. Securities and Exchange Commission sued Ripple for selling XRP as an unregistered security. The five-year legal battle ended in August with a $125 million settlement.
Brad Garlinghouse, CEO of Ripple
Tom Williams/CQ/Roll Call/Getty Images
Rather than retreat, Ripple spent. Over two years, it has executed one of crypto’s most aggressive acquisition streaks buying GTreasury, a treasury management software provider, for $1 billion, prime broker Hidden Road for $1.25 billion, stablecoin infrastructure platform Rail for $200 million and custody firms Metaco ($250 million) and Standard Custody (undisclosed).
So far, it’s working. Ripple says its payment volumes have surpassed $95 billion, and its RLUSD stablecoin, launched in December, just crossed $1 billion in market cap. It’s already being used as collateral on Ripple Prime, the rebranded Hidden Road business, which was clearing roughly $3 trillion a year across 300 institutional clients before the acquisition. The brokerage is also expanding into collateralized lending for XRP, according to the firm.
In the end, survival often proves the best trade. Thanks to its loyal fanbase that continues to support XRP’s lofty valuation, the blockchain company that once promised to reinvent global payments has taken a detour and bought itself some serious plumbing along the way. Still, it’s questionable whether the hodgepodge of businesses held by the crypto conglomerate justify the $179 billion valuation currently being afforded to Ripple and its token.
More from Forbes