Bitwise Liquids XRP Position in Crypto Index Fund Following SEC Lawsuit Against Ripple

Cryptocurrency manager Bitwise liquidated $ 9.3 million worth of XRP in its crypto index fund.

The company acted shortly after the United States Securities and Exchange Commission (SEC) sued the alleged creator of the token, Ripple Labs Inc., for conducting an unregistered and ongoing securities offering.

“Prior to the sale of the asset on December 22, 2020, XRP represented around 3.8% of the Fund,” the company wrote. “The Fund liquidated its position and reinvested the proceeds in other portfolio assets.”

The Bitwise 10 Crypto Index Fund is largely denominated in bitcoin and ether. The funds from his liquidated XRP position were reinvested in the other assets of the fund, according to a press release from the company. The fund also holds litecoin, bitcoin cash, LINK, ADA, XLM, EOS and tezos.

“The Bitwise 10 Crypto Index Fund does not invest in assets that are reasonably likely to be considered securities under federal or state securities laws,” the company wrote. “Bitwise’s decision to liquidate its position in XRP was based on considering new public information from the SEC complaint.”

Read more: SEC sues Ripple over 7 years, $ 1.3 billion ‘pending’ XRP sale

While there is no fund linked to the Bitwise 100 Total Market Crypto Index, which is maintained for academic and research purposes, XRP will be removed from that index at 4 p.m. ET today, Matt said. Hougan, chief investment officer of Bitwise, at CoinDesk. The Bitwise 100 combines the holdings of the Bitwise 10 Large Cap Crypto Index, the Bitwise 20 Mid Cap Crypto Index and the Bitwise 70 Small Cap Crypto Index, he explained.

Digital asset manager Grayscale Investments did not respond to a request for comment at press time.

The New York-based company, which is owned by CoinDesk’s parent company, Digital Currency Group, is currently offering investors an XRP Trust, which is modeled after the Grayscale Bitcoin Trust. Since its inception, the XRP trust has lost more than 80% in value, according to a July 2020 report.

Bitwise and Grayscale vehicles are intended for accredited investors only and provide access to crypto price gains without having to own the underlying assets.

While Bitwise quickly changed course, large Japanese financial group SBI Holdings told CoinDesk that the SEC lawsuit is not yet affecting its partnership with Ripple.

“From what we have heard, the lawsuit is currently pending and no injunction has been issued against Ripple for the sale of XRP or the provision of [On-Demand Liquidity] and other products, and the company continues to operate as usual and continues to expand RippleNet, ”a company spokesperson said in a statement on Wednesday. “Under these circumstances, SBI Holdings will continue to be a strong partner of Ripple as we work together to grow our business in Asia.”

Ripple’s liquidity on demand (ODL) service allows companies to transfer funds from one currency to XRP and from XRP to another currency. The cross-border payment tool allows companies to avoid opening bank accounts in countries to which they wish to send funds.

Earlier this year, Ripple and SBI holdings announced that Ripple plans to invest in MoneyTap, a blockchain money transfer application launched through a joint venture between SBI and Ripple called Ripple Asia. In January of this year, SBI announced that it would give shareholders the option to receive XRP as a benefit.

A spokesperson for US regional bank PNC said it would be “premature” for the bank to comment on its use of Ripple’s technology since it takes advantage of xCurrent, the distributed ledger technology that does not use XRP. PNC’s cash management division uses xCurrent to exchange messages between bankers and clients.

Spanish bank Santander, global trade finance bank Euro Exim Bank, London-based Barclays and Japanese bank MUFG declined to comment.

Eleven other financial institutions known to be linked to Ripple’s suite of services have yet to respond to CoinDesk’s requests for comment.

UPDATE (December 23, 4:41 PM UTC): Adds additional information regarding Grayscale, SBI Holdings and other companies with known links to Ripple and / or XRP.