​Ripple CTO considers XRP buyback theory a scam

What’s new? Ripple Chief Technology Officer David Schwartz spoke out on the XRP token buyback offer, which first appeared in 2021. He said that the initiative “looks an awful lot like a scam to me” and “anyone promising high returns with low risk is almost certainly going to rob you.” The XRP buyout proposal has been hotly debated on Twitter after Valhil Capital CEO Jimmy Vallee brought it up again in a recent interview.

I haven't looked at it very closely. But what I have seen looks an awful lot like a scam to me. If we've learned anything from 2012 and 2022 it's that anyone promising high returns with low risk is almost certainly going to rob you. — David "JoelKatz" Schwartz (@JoelKatz) February 5, 2023

Details on the situation. Advocates of the buyback theory are of the opinion that XRP could become the world’s reserve currency when the world’s government debt rises sharply and all banks switch to the ISO 20022 standard, leading to the use of XRP for cross-border monetary transactions.

According to Vallee, this would create the need for a buyback mechanism, since the purchase of large amounts of XRP by governments could not take place in secondary markets. In this case, the International Monetary Fund could give the token a special drawing right (eSDR), which would oblige XRP holders to sell their tokens at a fixed price, as in the case of gold. In doing so, Vallee believes the price of XRP could reach $50 000 per token.

Matt Hamilton, former director of developer relations at Ripple, called Vallee’s claims illogical. In a series of tweets, he reviewed the calculations cited, questioning whether the US government would buy back XRP from holders at a “stupidly high multiple of the market price.” He also questioned how 100% of exported goods, oil, food, and financial services could “magically becomes XRP value in the next decade.”

OK, so yet again you are assuming that 100% of global GDP will translate into XRP value? Why? All the good exported, the oil, the food, the financial services. You think 100% of that magically becomes XRP value in the next decade? How? — Matt Hamilton (@HammerToe) February 3, 2023

Ripple is a payment protocol for exchanging currencies and making transactions. It is used by government financial institutions in Australia, Canada, and Israel. XRP is used to provide liquidity by acting as a bridge for international transfers, allowing them to be completed in seconds and times cheaper than traditional service solutions. As of February 6, the asset ranks 6th in the rating of cryptocurrencies by market capitalization with a figure of $20,14 billion and is trading at $0,3966, down by 3,43% overnight, according to Binance.

Earlier, Matt Hamilton gave three reasons why the US government could not confiscate XRP. In his opinion, the decentralized model of cryptocurrencies would prevent this.

In December, lawyer John Deaton said that a ruling in the case of the US Securities and Exchange Commission (SEC) against Ripple on the sale of XRP as an unregistered security will be made in April-early May 2023.

For how the successful outcome of the proceedings between Ripple Labs and US regulators could affect the cryptocurrency’s rate, read GetBlock Magazine’s special feature.