Controversy Ensues About Ripple’s Escrow Holding and its Effect on XRP Price

The XRP community has gathered around a post on X by pro-crypto lawyer, Bill Morgan, explaining how the Ripple XRP escrow works and refuting claims that it suppresses the price of the token. XRP investors have been curious about the mechanism behind the escrow and the actual effect it has on the market upon monthly release.

Recall that Ripple releases 1 billion XRP from its escrow at the beginning of every month as a way to manage and control the flow of the coin in the market. However, Ripple’s Q3 2024 Markets Report has rekindled the debate among members of the community as the data shows that the balance dropped from 39.5 billion at Q2’s end to 38.9 billion in Q3.

Bill Morgan Clarifies Ripple’s XRP Escrow Impact

Earlier today, a user on X (formerly Twitter), “WelcomeNowLeave,” sought clarity about what it means to hold and not hold a coin in escrow. He asked about the impacts it has on retail investors and other financial institutions.

Responding to him, prominent lawyer and crypto community member, Bill Morgan explained that the escrow represented Ripple’s “responsible stewardship” of the large volume of XRP that it controls. Morgan countered speculations made by the SEC in its lawsuit against Ripple that the escrow was one of the measures Ripple took to inflate the price of XRP.

Well the SEC in the lawsuit asserted the escrow was one of several measures Ripple took to buttress the price of XRP. Many in the XRP community believe it suppresses the price of XRP but that seems wrong for dozens of reasons. Ripple messaging is that the escrow shows its… https://t.co/RzzNlNxSnl

— bill morgan (@Belisarius2020) November 3, 2024

Also, Morgan pointed out that some members of the XRP community also think that Ripple suppresses the XRP price with its escrow. However, Morgan maintained that the escrow has no direct or indirect impact on the movement of the coin, rather, it is only a strategic fund management process.

Community Reaction

Meanwhile, not everyone in the community bought into the explanation made by Morgan. Many still restated that the escrow is a price manipulation mechanism employed by the blockchain company.

A user, @BagtaengG, argued that large holders of XRP might not feel the impact of the escrow on the price of the coin, “but it is true that escrow volume suppresses prices.” Morgan quickly responded to him, refuting his claims and emphasizing Ripple’s original plan for the escrow.

Another user @Satspopeye, gave a different view, however. He opined that the escrow is the biggest obstacle to XRP’s adoption. According to him, unless the escrow is emptied, the SEC will prevent XRP’s growth, and the lawsuit is a perfect example of how they would do this.

Ultimately, as the case between Ripple and the SEC continues, investors keep a close eye on anything that could possibly impact the price of the XRP coin including Ripple’s escrow holding.