Ripple Lawsuit: After Victory Comes the IPO!

Ripple Labs is now saying that it will go public after the XRP (CRYPTO:XRP) lawsuit concludes. What does that mean for investors?

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The XRP (CRYPTO:XRP) lawsuit is still underway. Experts have predicted that the trial will conclude anywhere from November 2022 to sometime in 2023. Trial seems to be the right word to use here, because a settlement is looking unlikely. The SEC wants Ripple Labs to pay $1.3 billion plus interest, while Ripple wants the SEC to pay its legal bills. These don’t look like two parties that will reach a compromise, so investors need to prepare for the possibility of a drawn out legal battle.

Nevertheless, there is some good news for investors here: Ripple Labs says that it plans to go public once the trial is over!

In a statement last week, the company said it would do an IPO, making it a publicly traded crypto developer. This development could be a new opportunity for XRP holders to invest in the broader Ripple ecosystem. In this article, I will explore the rumoured XRP IPO and what it could mean for shareholders.

What Ripple does

Ripple Labs is fundamentally a payments company. It develops a payment platform called RippleNet, which can be used to buy and sell things. It can also be used to source liquidity. Banks like the Canadian Imperial Bank of Commerce are reportedly using RippleNet to make cross-border money transfers faster. International wire transfers are notoriously slow, but with XRP and RippleNet, they are nearly instantaneous. The way this works is that a bank will trade currency for XRP in one country, instantaneously send the XRP to another country, and then do another token-for-currency trade there. This is much faster than the current international transfer system, which involves many time-consuming checks and is affected by bank hours of operation.

Potentially, Ripple Labs’s IPO could be a great opportunity. Crypto prices are always volatile, but the use of XRP in cross border payments could be more stable. If big banks are using it, that suggests the demand for RippleNet is very real. So, maybe “Ripple stock” could be a nice alternative to investing in the highly volatile XRP token directly.

Is a settlement coming soon?

As we’ve seen, Ripple Labs has some big plans for its life after the SEC lawsuit. Some of them could make for promising investment opportunities. The question is when this thing will finally end. The SEC lawsuit has been going on for a year and a half already, and the SEC shows no signs of backing down. Given the two sides’ unwillingness to compromise, it looks like a settlement isn’t happening — or at least, isn’t coming soon. Investors need to be prepared for the possibility that this thing goes all the way to trial. If that’s the case, then it will probably conclude sometime between November 2022 and 2023. This is the approximate timeline that experts following the case have given for the whole matter to be resolved.

So, will Ripple Labs be a buy after it goes public? It’s hard to say. We do know that banks are signing up for RippleNet, but in the absence of audited financial statements, we don’t know how much actual business this is creating for Ripple. Perhaps it’s best for investors to sit tight for now. More clarity will come after the lawsuit is over.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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