Key Takeaways:
Ripple Chief Executive Officer Brad Garlinghouse said Michael Saylor's approach to funding Bitcoin purchases has damaged the broader crypto market, pointing to Strategy's preferred shares trading 25% below par as evidence that financial engineering does not drive long-term value.
"Financial engineering does not drive long-term value. Utility does," Garlinghouse said in a social media post quoting his appearance on CNBC's "Squawk on the Street." The Ripple CEO accused Saylor of hurting the overall market by focusing on preferred-stock issuance rather than real-world technological utility.
Strategy's STRC preferred shares, which carry an 11.5% annual dividend and are engineered to trade near $100, recently fell to a record low of roughly 25% below that level. Garlinghouse called the discount a "damning indictment" of the model. The pressure on Strategy's funding engine intensified as Bitcoin slipped below $59,000, with the company's common stock closing around $82 on Friday, its lowest since February 2024.
CryptoQuant said in a report that Strategy should pause its Bitcoin buying and rebuild cash reserves, noting the cushion behind STRC's dividends has thinned from more than seven years of coverage to about 14 months. When STRC trades below $100, Strategy's engine for issuing shares and buying Bitcoin stalls, which is why the company has paused it. Benchmark-StoneX analyst Mark Palmer argued the funding engine has become "less efficient" rather than broken, rejecting comparisons between STRC and assets that have collapsed outright.
The clash between the two prominent crypto executives is not new. In 2022, Saylor called XRP an "unregistered security" and urged the U.S. Securities and Exchange Commission to shut down the token alongside other altcoins. Though Saylor recently surprised the market by expressing support for a U.S. multi-token cryptocurrency reserve that might include XRP, the friction remains unresolved. For Garlinghouse, Strategy's current market woes present an opportunity to vindicate Ripple's focus on utility over leveraged accumulation.
This article is for informational purposes only and does not constitute investment advice.
