The CEO of Ripple, Brad Garlinghouse, took to Twitter to address the crypto community about the collection of concerns that have been raised about XRP over the last few months.

Garlinghouse said that he felt “compelled” to comment on the “questionable sources” that have been “spreading FUD” about the firm and its native token. Garlinghouse weighed in on a class-action lawsuit against Ripple, the substantial increase in XRP sales seen from Q1 to Q2 2019, and the steps that the firm has taken to bring transparency to its business.

On Aug. 5, 2019, a new complaint was filed against Ripple arguing that the firm’s tokens are unregistered securities under the U.S. Security and Exchange Commission’s framework. The filing also claims that the payment processor company broke a number of laws in the state of California by reportedly “blurring differences between Ripple’s enterprise solutions and XRP to further drive demand,” and “paying exchanges to list XRP, limiting the supply of XRP to drive demand.” This is the latest update to a lawsuit that was filed over a year ago.

Due to his stance as a defendant in the class-action lawsuit, Brad Garlinghouse limited himself to comment on it but maintained that XRP is not a security. He highlighted the fact that the SEC’s guidance is not issued by the regulatory agency itself and as a result cannot be considered “law, rule, or regulation.”

Garlinghouse added that the UK Financial Conduct Authority recently stated that in contrast to a security token, XRP could be better classified as a hybrid between an exchange and utility token.

Ripple’s CEO refers to a publication released by the FCA where the regulatory body compares XRP to Ethereum.  According to the FCA:

“Tokens may have mixed features that may overlap with the above categories, or change over time. For example, Ether can be used as a means of ‘payment’ (exchange token) on the Ethereum platform, and can also be used to run applications (utility token). XRP has similar features.”

Although the UK Financial Conduct Authority has not granted XRP with “non-security” status, this can be considered a strong step towards regulatory clarity. It remains to be seen whether the U.S. Security and Exchange Commission will do the same as Ripple sent an open letter to Congress asking not to be “painted with a broad brush.”

Ripple has been steadily increasing their sales of XRP over the previous three quarters, according to Kyle Samani, co-founder of crypto hedge fund Multicoin Capital. In its latest quarterly report, the company revealed that it sold $251.51 million in XRP during Q2 2019. This represents a nearly 50 percent increase from the previous quarter where Ripple sold $169.42 million worth of XRP, said Eric Turner, director of research at Messari.

Despite the substantial increase in sales, Garlinghouse stated that it is meant to help the company amplify the utility of the token. Building RippleNet and supporting other businesses with the use of XRP is one of the top priorities of Ripple in order to expand the adoption of its technology.

In fact, the company reported earlier this year that the total RippleNet network surpassed 200 customers worldwide and that it has been signing two to three new customers on a weekly basis since 2018.

Garlinghouse said:

“In 2018, nearly 100 financial institutions joined RippleNet, and we’re now signing two—sometimes three—new customers per week. We also saw a 350 percent increase last year in customers sending live payments, and we’re beginning to see more customers flip the switch and leverage XRP for on-demand liquidity. At the end of the day, our goal is to make sure our customers can provide excellent, efficient cross-border payments experiences for their customers, wherever they are in the world.”

Moreover, Garlinghouse stated that the volume in XRP actually decreased quarter-to-quarter, but failed to address the sell-off seen among his former and current team members. For instance, Jed McCaleb, who is no longer at Ripple, is reportedly selling half a million XRP on a daily basis, according to Coin Metrics, while David Schwartz, Ripple’s CTO, sold 2.8 million XRP since the beginning of 2019.

Finally, Garlinghouse said that when it comes to transparency Ripple “continues to set industry standards” by publishing quarterly reports that serve as proof of how the company is doing. The most recent report reads:

“Ripple believes in proactive transparency and in being a responsible stakeholder. Ripple urges others in the industry to follow its lead to build trust, foster open communication, and raise the bar industry-wide.”

The quarterly reports have been released since the firm placed 55 billion of its XRP into a cryptographically-secured escrow account at the end of 2017. Ripple promised it would get access to no more than 1 billion XRP on a monthly basis and committed to offer the released XRP to institutional buyers, and deposit the unsold amount back into the escrow.

Although the reports detail the escrow activity among other updates every quarter, the reported numbers have differed from actual sales figures at least twice, according to Nic Carter, co-founder of Coin Metrics.

Using ledger information obtained from Ripple’s Data API, Coin Metrics matched the published figures in those reports to the on-chain activity. Coin Metrics found that in two reports (Q3 2018 and Q1 2019), Ripple misreported the amount of XRP it returned to its escrow scheme.

Carter said:

“I’d say it is unexpected, the amount they will release from escrow is not known in advance. So that’s why, under market efficiency, it’s plausible that this could nevertheless consist of a ‘supply shock,’ as opposed to Bitcoin issuance, which is predictable and known in advance.”

Despite Brad Garlinghouse efforts to bring more clarity about Ripple and XRP to the crypto community, many questions were left unanswered. CryptoSlate reached out Garlinghouse after his remarks and has yet to receive an answer. In the meantime, the U.S. Security and Exchange Commission will have the last word on whether XRP is a security.

The post Ripple CEO Brad Garlinghouse takes to Twitter to clarify the “FUD” around XRP appeared first on CryptoSlate.

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