Ripple, a renowned crypto company famous for its payment infrastructure and expanding client base, has come under fire from Forbes. The publication accuses the company of focusing more on selling its native cryptocurrency, XRP than driving adoption and growth.
Forbes Questions Ripple’s Adoption and Growth Strategies
In a recent article, Forbes writer John Hyatt scrutinized Ripple’s business model, alleging that the company promotes XRP sales instead of improving remittances and cross-border payments.
Martin Walker, the director of banking and finance at the Center for Evidence-Based Management, supported this view in an interview with Forbes. He states that Ripple’s true intentions come to light when information about its practices emerges.
Hyatt used the Malaysian payment company Tranglo to support his argument. Tranglo is one of Ripple’s most prominent clients, utilizing the company’s On-Demand Liquidity (ODL) product for instant cross-border transactions. Through ODL, Ripple provides clients with XRP, which they can repay in cash equivalent to the cryptocurrency’s value.
However, Forbes contends that Ripple indirectly uses ODL to offload XRP into the open market. Ripple holds a 40% ownership stake in Tranglo, and according to the latter’s filings, only 8% of its customers choose to settle payments with XRP.
Global E-Money Alliance’s Involvement in Tranglo’s XRP Transactions
Global E-Money Alliance, a Hong Kong-based financial services company, accounts for 73% of Tranglo’s XRP-related revenue. The connection between the two companies is further emphasized by Alex Kong, Global E-Money Alliance’s chairman, who also serves as a board member at Tranglo. These relationships raise questions about whether Ripple exploits ODL to unload its XRP holdings.
Speaking to Forbes, former Ripple employees shared their thoughts on the company’s profitability. They suggested that while Ripple’s software business might not be profitable, it enjoys significant profits from selling XRP.
Ripple CTO Addresses Criticisms
In response to the allegations, Ripple’s Chief Technology Officer (CTO), David Schwartz, explained that Ripple was established to distribute XRP as widely as possible. However, he also acknowledged that the company aims to generate enough revenue from XRP sales to sustain its operations.
However, when the community pressed Schwartz on whether Ripple places more value on selling its services to institutions or selling XRP in general, the CTO needed to provide a clear answer.
As Ripple faces increased scrutiny over its business practices, questions about its true motives persist. As a result, the crypto community will be closely watching to see if Ripple adjusts its strategies to prioritize the growth and adoption of its payment solutions over the sales of XRP.
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