The equity of Ripple Labs, the parent company behind XRP is reportedly trading at $2 to $3 billion in the secondary market. However, the XRP holdings of the distributed ledger company are reportedly worth $70 billion, which is many times higher than the valuation of the firm's equity. The massive discrepancy between Ripple’s estimated equity price and its XRP holdings was first brought to notice by Mike Novogratz.
“Ripple equity is ‘trading’ in secondary market at $2-3bn valuation. The $XRP on their balance sheet is worth approx $70bn. One price seems wrong. If $XRP price is saying settlement coming, the equity is crazy cheap. If not, the token seems expensive.”
Responding to Novogratz, Crypto researcher, Leonidas Hadjiloizou wrote:
“Ripple’s XRP sales are the ones under attack from the SEC so the market probably hasn’t priced in Ripple’s XRP holdings since they are in limbo right now.”
Hadjiloizou also pointed out that $62 billion of the XRP in Ripple’s balance sheet is locked in escrow. Hence, these holdings have most likely not been priced into Ripple’s current valuation.
In December, 2017, Ripple published a statement stating that the XRP holdings in Ripple’s escrow account will be released in instalments of maximum 1 billion XRP per month for the next 55 months.
The question on the discrepancy between Ripple's equity and its XRP holdings started to emerge as the price of XRP started to rally above $1, despite an ongoing lawsuit with U.S. SEC.
XRP is currently trading at $1.35, nearly 500% more than its price on January 1st, 2020 ($0.23).
Over the past two weeks, the trigger for the 160% rally came from victories in the company's legal battle. Earlier this week, Ripple lawyers were granted access to internal SEC discussion. Meanwhile, a court denied the SEC’s request to access the financial records of its two Ripple executives.