Ripple Appears to Violate Coinbase Crypto Listing Framework

Journalist:
February 26, 2019

Coinbase announced the listing of Ripple (XRP) on Coinbase Pro yesterday. The massive-supply token saw a significant price rise on the news. However, as first identified by Diar, Coinbase’s listing of the bank-friendly coin appears to violate its own Digital Asset Framework, which outlines requirements which cryptocurrency assets must meet prior to their listing on the US exchange.

Coinbase: We Won’t List Cryptocurrency if Company Controls Majority Stake

The Ripple price jumped following its listing on Coinbase.

Coinbase’s GDAX Digital Asset Framework outlines the types of crypto tokens it will list. On page five of the document, it states:

“The ownership stake retained by the team is a minority stake. There should be a lock-up period and reasonable vesting schedule to ensure the team is economically incentivized to improve the network into the future.”

While the latter part might be true, Ripple Labs is far from owning a minority stake. XRP’s open secret: Ripple Labs controls over 60%, either in escrow to fund operations or direct possession of company founders. People frequently comment on this fact, especially when discussing the actual network market capitalization of Ripple. A report from Messari Research finds that Ripple may have a market capitalization exaggeration of around 50%.

Ripple Held to a Different Standard?

Unlike Bitcoin, Ripple’s supply is distributed by a single company. | Source: Shutterstock

Of course, Bitcoin is not innocent, either. Many of its total coins are lost or “hodled” to the point they will never be traded. In any case, is XRP really worth a sum total of over $13 billion? A massive sell-off would provide answers. But we’ve seen what happens to the price of XRP during bear markets and sell-offs.

All of these reasons are part and parcel to the policies Coinbase previously set for itself. Ripple launched in the early days of the first ICO run. ICOs were conducted informally and scams were more rampant but less successful. It’s no different than any other token with a huge economic control in the hands of the “team.”

XRP’s listing is not a direct violation of anything – the standard applies to ICOs rather than established cryptocurrencies like XRP. But one wonders why Ripple Labs should be treated any differently.

Founder Rewards Are High Everywhere

But, in reality, the “founder reward” is high no matter where you look. Satoshi Nakamoto holds in excess of 1 million bitcoins. Vitalik Buterin maintains at least one wallet with more than 300,000 ether at present.

At the same time, Coinbase has received criticism for its listing of several cryptocurrencies in recent months.

Then, there is the “Coinbase effect.” While the price was bullish on the news of the Coinbase Pro listing, several tokens have seen a depression after listing on Coinbase. Will Ripple follow suit? By the numbers, if the token’s price dropped by half – at any time – it would more accurately reflect its true value to the market since most retail investors are likely unaware of Ripple Labs’ massive XRP holdings.

Then again, something is worth what someone else will pay for it. People seem comfortable in the 30 cent range for XRP. The huge supply guarantees it will always be somewhere in the lower rungs of pricing – any significant demand will be met with a quickness.

CCN has reached out to Coinbase for comment and will update this article upon receiving a reply.

Featured Image from Shutterstock. Price Charts from TradingView.

P. H. Madore @bitillionaire

P. H. Madore has written for CCN since 2014. Please send breaking news tips or requests for investigation to bitillionaire+phm@gmail.com. He lives in Maine, USA. A single father of four young children, he does not discourage financial donations, provided they do not come with strings attached.