Ripple, the company behind the XRP token, has bought $8.4 billion worth of XRP since the start of the lawsuit against the US Securities and Exchange Commission (SEC). The reason for the company’s massive purchases was to “keep the market healthy.”
Strange decision from Ripple?
It remains to be seen whether that was a smart decision by Ripple. After all, the lawsuit between the company and the SEC revolves around whether the token qualifies as a security. Broadly speaking, this is the case if the issuer of a financial asset makes an effort to drive up the price.
In the case of Ripple’s purchases, this seems to be the case. It is of course a good thing for investors in the project, because it ensures price increases. Without Ripple’s $8.4 billion backing, the price might not have been as high as it is today.
Earlier this week it was announced that Ripple sold massive amounts of XRP in the fourth quarter of 2022. It now appears that it used the proceeds from those sales to buy XRP on the public markets to support the price.
The reason for the XRP purchases?
Ripple sells the XRP tokens to the customers, who then use them in the company-built protocols on the XRP Ledger. “A healthy market for XRP is necessary to reduce costs and risks for customers and Ripple plays a responsible role in the liquidity process,” Ripple said in the statement. quarterly report of Q2 2020.
“The more financial institutions that use RippleNet’s ODL service, the more liquidity is added to the market for XRP. That said, Ripple is a buyer in the second-hand market and it is possible that we will continue to do so in the future at market prices,” the report continues.
