The relationship between Ripple Labs and XRP tokens has been a controversial topic in the crypto community for some time. Although there is evidence in older documents that XRP was also called Ripple in the past, since the XRP initiative in 2018 the company has emphasized that the cryptocurrency is called XRP .
In particular, the company’s huge holdings of XRP in escrow accounts have been the subject of controversy. In December 2017, Ripple created 55 escrow accounts, each holding 1 billion XRP. More than five years later, in January 2023, the company was still possesses 43.3 billion XRP out of the pre-mined 100 billion XRP.
While Ripple created the escrow accounts to provide transparency and also publishes quarterly reports, a Twitter researcher named “Mr. Huber” made a ‘discovery‘ which sheds light on Ripple’s impact on the XRP Price.
Does Ripple intentionally influence the price of XRP?
Yesterday, in an update on XRP trading by the company, the researcher wrote that the company bought the junkyard on New Years with an unusually high volume and is currently selling it with an unusually high volume:
Remember the discharge at New Year’s? It turns out that Ripple bought the junkyard with an unusually high volume and is now reselling it with an unusually high volume. What could be the reason? Pure speculation.
The data to which the researcher refers comes from the official API. “That’s how they are transparent. You don’t have to wait for quarterly reports, you can get weekly data from their API,” Huber explained.
Remarkably, the company is currently selling four times more XRP than it has sold on average over the past two years.
The researcher first posted his investigation on Twitter at the end of October last year. At the time, he wrote that he was surprised that no one had taken a closer look at the company’s XRP holdings not returning to escrow.
On October 23, Huber shared the chart below, showing XRP supply separated into distributed supply, escrow, and non-distributed supply. Red shows fintech’s liquid XRP holdings. According to the researcher, they steadily declined since November 2020 until there was a reversal in September 2022.
The data set since the beginning of 2022 revealed that assets in escrow were decreasing while undistributed supply was increasing. “At the red line, you can see very well when Ripple is selling and buying back. Ripple is buying back now,” the researcher wrote in late October.
A member of the XRP community asked the researcher in October if he thought XRP was actually inflated by redemptions. huber replied
Ripple is very transparent about the number of tokens it contains. But exactly how Ripple calculates this was unclear. Apparently, the XRP that Ripple buys back is considered “non-circulating”. I have now discovered that you can use the API to track the amount of XRP Ripple sold and purchased.
As Huber explained, the reasons can only be speculated. Nevertheless, he writes:
Come to think of it, Ripple is basically trying to keep the price as stable as possible.
In October, Huber suggested that the purchases were tied to purchases of XRP on the secondary market. ” It’s exactly that ! Ripple has repurchased around half a billion XRP since September! This is probably why the price has increased and why the circulating supply has decreased although more XRP has been released from escrow!
Here’s what the latest quarterly report says
This is supported by the latest quarterly report report (Q3 2022), in which the company wrote that it had been a secondary market buyer of XRP and planned to continue buying as on-demand liquidity (ODL) continued to gain momentum worldwide.
In Q3 2022, Ripple’s total XRP sales, net of purchases, were $310.68 million, compared to $408.90 million in the previous quarter. The company emphasized that it continues to sell XRP only in conjunction with ODL transactions.
Additionally, he said he had not made any programmatic sales (since Q4 2019) and “did not plan to do so in the future.”
At press time, XRP price was trading at $0.3879.
Featured image from iStock, chart from TradingView.com