Ripple’s Schwarz: Bad Logic Says XRP Sales Give Discounts

The evergreen debate over how Ripple, the controversial San Francisco-headquartered firm, manages its vast XRP riches keeps flaring up on the X social media network. 

This time, David Schwartz, Ripple’s CTO Emeritus, stepped in to address the latest accusations that the company’s shareholders are being encircled at the expense of retail XRP buyers.

Socializing costs 

The exchange kicked off when Zach Rynes, a prominent pro-Chainlink commentator, took aim at Ripple’s dual-funding model. 

He posits that there is a conflict of interest when a company (in this case, Ripple) issues both equity to private investors and a token to the public. Retail XRP buyers are actually “funding a company that has openly stated it will prioritize its equity shareholders over you.” 

He has challenged the community to explain why it is acceptable for Ripple to use the proceeds from selling “premined coins” to acquire other companies and fund stock buybacks.

In response, some XRP fans have argued that Rynes was using “misleading framing.” They pointed out that expecting an open network asset like XRP to behave like traditional corporate equity fundamentally misunderstands how digital assets work.

David Schwartz then weighed in directly on Rynes’s premise. Schwartz challenged the framing that this selling is inherently detrimental to investors looking to accumulate the asset.

“One could equally well (actually, equally wrongly) make the argument that all of this is great for people trying to make a profit by holding XRP,” Schwartz wrote. He explained that if the sales suppress the asset’s value, “it means that they can buy at a much lower price than they would have to otherwise.”

Some other users have argued that the proceeds from Ripple’s XRP sales are actively used to purchase and build infrastructure that ultimately bolsters the utility and long-term value of the XRP Ledger. “Company growth = strong company health… value of token expected to grow over time,” one user added. 

Several users pointed out the double standards applied to Ripple. Ethereum insiders, for instance, frequently sell massive amounts of ETH. Even Chainlink, the network Rynes advocates for, sells tokens to fund its project development.