Is Ripple fudging the XRP numbers?

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Messari, a cryptocurrency data startup, may just be trying to make a name for itself in the crypto analysis world, but it reports that something is seriously wrong with the numbers presented for Ripple’s XRP coin. The company asserts that the circulating supply and actual market capitalization are significantly lower than what has been published.

According to most available data, including that of CoinMarketCap, XRP’s circulating supply is around 41 billion tokens. Messari claims, however, that 19.2 billion of this “may be illiquid or subject to significant selling restrictions.” Those restrictions include, among other things, “at least 6.7 billion XRP held by Ripple co-founder Jed McCaleb that are subject to an agreement between him and Ripple.”

Messari also states in its report, which can be found on the company’s website, that the accepted number of coins in circulation includes another 5.9 billion pledged by Ripple to go to RippleWorks, a nonprofit organization, adding that the amount still hasn’t been delivered. Messari believes that RippleWorks already controls 2.5 billion coins that are subject to daily selling restrictions.

According to its analysis, XRP could be “likely overstated” by at least $6 billion. The data startup acknowledges that it had to use a certain amount of educated guesswork to reach its conclusions. It said that it is “impossible to track the magnitude of this illiquidity without direct disclosures from Ripple, so we use a reasonable estimate.”

Prior to releasing its findings, Messari asserts that it attempted to receive input from Ripple, but that the company never responded. This, it claims, adds a certain degree of legitimacy to its findings, stating, “Ripple has not shared the methodology or reference exchange data it uses to calculate trading volume for XRP, a critical data point that drives selling restrictions. More than 99% of XRP trading volume appears to come from overseas exchanges, many of which have been suspected of wash trading,”

After the report was published, however, Ripple decided to step forward. It told CoinDesk, “Not only does this report contain several inaccurate assumptions around lockups and selling restrictions, the entire report is based on an incorrect calculation of market cap. While decentralized digital assets like XRP are different from traditional equities, the term ‘market cap’ is always a very simple calculation: current price X total number of the asset = market capitalization. That puts XRP’s current market cap at approximately $31 billion. We believe that any other calculation of market capitalization for XRP is not a clear representation of the truth.”