Remember Ripple? No? That’s ok, neither does anyone else apparently.
As it turns out, people tend to forget about things that lose 85% of their value in the space of four months, which is what’s happened to Ripple after it hit a high above $3 earlier this year.
That absurd blowoff top for the coin (which sports a literal fidget spinner as a logo) came hot on the heels of 2017’s 32,000% gain. The furious rally briefly catapulted cofounder and former CEO Chris Larsen above Google founders Larry Page and Sergey Brin, Steve Ballmer, Larry Ellison, and a whole host of other high profile billionaires on the list of Earth’s richest people.
When someone writes the history of cryptocurrencies, the short-lived Ripple mania may end up marking “peak crypto”, because as silly as it most assuredly was, there for a minute it looked like Larsen might end up becoming the richest man on the planet by the end of January. On paper at least.
If you think back to that exceedingly surreal episode, one of the only things that kept Ripple from rallying even further (and I guess making Chris Larsen a trillionaire) was its conspicuous absence on Coinbase. Rumors abounded about if and when XRP would be added to the popular exchange, but cold water always seemed to get thrown into the mix.
XRP’s story is supposed to be differentiated from the rest of the cryptosphere by virtue of Ripple’s convoluted plan to disrupt the existing infrastructure for global payments, but as Bloomberg reports, it turns out getting XRP listed on Coinbase and Gemini was pretty damn important to the company. So important, in fact, that they tried to pay $1 million to get on the platforms. To wit:
Last year, the San Francisco-based company suggested paying financial incentives to the venues, Gemini and Coinbase, according to four people with direct knowledge of the matter, who asked not to be identified discussing private information.
Now I don’t want to speculate on what that says about the viability of the company’s push to promote its network (i.e. about the viability of the entire Ripple narrative), but the above clearly suggests that the token is a key piece of the puzzle.
Bloomberg goes on to detail exactly how these “discussions” progressed:
Last year, a Ripple executive asked whether a $1 million cash payment could persuade Gemini to list XRP in the third quarter, according to people familiar with the matter.
During preliminary talks with Coinbase last fall, Ripple said it would be willing to lend the exchange more than $100 million worth of XRP to start letting users trade the asset, according to a person privy to that discussion. Ripple, without putting the proposal in writing, told Coinbase it could pay back the loan in XRP or dollars, the person said. If the exchange had chosen the latter, it could have profited had the tokens become more valuable upon being listed, the person said.
I can just hear that conversation now:
So what if I told yous that Johnny Roast Beef could get you say, $1 million fazools tomorrow? Fuggedaboutit.
Both exchanges ultimately told Ripple to fuck off or, as Bloomberg puts it, “declined to pursue the proposals”.
That’s probably at least in part because the rather confusing relationship between XRP and the company Ripple means it’s at least possible that the token could end up being classified as a security by regulators. That, in turn, would mean that any exchanges where it trades would similarly fall under regulatory oversight.
If you’re a business that is involved with cryptocurrencies the last thing you want is more regulatory scrutiny.
Of course the rather obvious question all of the above raises is this: is it legal for Ripple to try and pay for a listing on Coinbase and/or Gemini? Well, nobody really knows precisely because nobody really knows what XRP even is. Here’s Bloomberg again:
Paying for a listing could be perfectly legal, given that traditional markets charge such fees, said Jesse Overall, an attorney at Clifford Chance. But things could get complicated if a digital token were later deemed to be an unregistered security.
“In the equity space, listing fees have always historically been coupled with the notion of regulation,” while digital currencies are relatively unsupervised, said Dave Weisberger, CEO of CoinRoutes, a cryptocurrency data and order routing company.
Yet the motive to list is still there: A crypto issuer paying to get their token on an exchange “could make 100 times that payment by selling off those coins when it lists,” Weisberger said.
And there it is. That’s pretty much the only thing in all of this that isn’t laughably ambiguous. At the end of the day it’s all about money. Real money. Not fidget spinners.
As far as the legality here is concerned, I guess all we know for sure is that it’s 100% legal, 60% of the time.