Garlinghouse is not optimistic due to SBFās alleged fraud but hopes Ripple can recover a substantial amount of the funds through the courts.
Ripple chief executive officer Brad Garlinghouse, in aĀ recent fireside chatĀ on CNBCās Tech Transformers at Davos, has disclosed that the blockchain payments company had exposure to FTX.
Garlinghouse revealed that Ripple leased about $10 million in XRP to the now-bankrupt crypto exchange.
ā⦠we did have some exposure to FTX,ā the Ripple chief said. āI think ⦠weāve publicly shared before thereās around just over $10 million of XRP we had leased to FTX that they use for various things on FTX⦠Iām hopeful that through the bankruptcy process, we get some or all of it back but uh itās not too consequential to the business.ā
Unsurprisingly, Garlinghouseās statements have raised some eyebrows, as finance author and coach Linda P. Jones questioned the nature of the transaction.Ā
However, it is worth noting that Ripple regularly provides short-term XRP leases to market makers and participants from XRP meant for sales, per its quarterly reports. Usually, these leases are returned to Ripple. Per Rippleās last quarterlyĀ reportĀ on Q3 2022, the total amount of outstanding leases stood at 91.1 million XRP. It is currently unclear what guardrails are in place if a counterparty fails to return leased XRP.
The Ripple chief asserted that it is unclear what the company will get back from the lease, considering Sam Bankman-Friedās alleged fraud. According to Garlinghouse, while other companies had too much exposure,Ā Rippleās XRP lease represented only about 1% of its liquid assets.Ā Noting that he would rather not lose that money, the CEO said he is hopeful that Ripple will recover some or all of it during the bankruptcy proceedings.Ā However, he asserts that it is not a detrimental loss to the business.
āAnd for us⦠that I thinkĀ represented about 1% of liquid assets,ā Garlinghouse said. āI would rather not lose that money. And Iām hopeful that through the bankruptcy process, we get some or all of it back, butĀ itās not too consequential to the business.ā
Backing his claim of Rippleās strong balance sheet, Garlinghouse points out that the firm continued to hire new staff as its business expanded to serve new customers.
Ripple Interest In FTX Assets
It is worth noting that the Ripple chief had previously disclosed an interest in acquiring FTX assets, particularly stakes in institutional-facing businesses, per aĀ reportĀ from The Times. Notably, Garlinghouse said this as he revealed that he had received a call from SBF days before the exchange filed for bankruptcy. The CEO of the blockchain company disclosed that he had expressed willingness to provide the exchange with liquidity for a stake in businesses that could benefit it.Ā
While he admits that any such acquisition would now be more difficult in light of bankruptcy proceedings, he disclosed that the firm is still looking into it.
FTXās Stunning Collapse
FTX and about 130 subsidiariesĀ filedĀ for bankruptcy protection last November after a bank run revealed an estimated $8 billion hole in its balance sheet. The companyās valuationĀ plummetedĀ from about $32 billion to $1 in 24 hours.
In a civil lawsuit, the US Securities and Exchange Commission hasĀ accusedĀ former FTX CEO SBF of multi-year fraud that saw him regularly divert customer funds for personal use and investments. The erstwhile crypto billionaire is facing aboutĀ 8 counts of fraud in the US Southern District of New York, excluding civil suits from the SEC and the Commodities Futures Trading Commission.
SBF is on bail on personal recognizance secured by aĀ controversial $250 million bond.Ā He faces over 100 years in prison if found guilty on all charges, to which he recently entered a plea of ānot guilty.ā