Ripple's $1.25B Acquisition Is Bigger Than You Think

Transcript

The other thing I want to cover outside of the markets and venture stuff is uh M&A. Yeah. So, I mean it is just hot. It basically feels like you had this uh it's you know like a dam. I'm picturing like a the Hoover Dam or something and there's just all this water getting backed up for years and then like dam just opens and the floodgates open. I think what you're seeing is you know the there's no M&A for several years. Just dead. No M&A. And now you're seeing several years of M&A compressed into a one-year time. Yeah. Why do you think that is? Uh just regulations opened up. Yeah, I just think it's regulations opened up and now the the industry is mature enough where people are saying I'm going for the jugular. I'm trying to take the crown right now. Part of my pitch is so um uh there's these

foundations that have a lot of money. Yeah. Right. Ethereum foundation. Consensus kind of tried to do this but it was too early. And I asked them, hey, what did AOL do in the peak of the do bubble? But yeah, Time War Time Warner they swallowed Time Warner biggest acquisition of the time and they like used their currency which was totally inflated. They knew that you straight face run any valuation methodology around that they bought a real business. Yeah. Uh who what was the largest acquisition that just happened to date ever in crypto? Crypto. Well, there was the Ripple Ninja Trader one. Excuse me.

Excuse me. Kraken Ninja Trader one was5, but Ripple just bought Hidden Road for 1.25. Yeah. So the second largest but let's unpack that especially the Ripple one. Yeah, Ripple is this one's interesting. So for people who don't know uh Hidden Road is uh was started by in 2018 by this guy Mark Ash. He was an exec at um um what is who's the guy that um SACE Capital 72 exec from 72 set up the shop in uh in uh like global shop Netherlands UK. Um I think they're actually struct headquartered in the BVI. Shout out to Nick Carter. Um they I think they backed them. They led the the first round in 2018. Basically they are an institutional um prime brokerage firm, right? So basically so they do

clearing financing um they clear more than three trillion annually across markets. Started not just crypto, not just crypto. So they actually started as an FX firm and then expanded into crypto. 300 institutional clients. Everyone from like uh Wintermute to Vertu trades on them and they're a massive massive massive clearing house. Uh they don't do any prop trading in house very like they you know promote like conflict free very tech forward I actually met with one of the founders the other day a phenomenal phenomenal firm and yeah so they they clear like FX equities commodities digital assets crypto fixed income cross margining capabilities across all of those massive firm they just got bought by Ripple just bought them for 1.25 What's going inside of Brad's uh brain

when he decided to buy that genius. Genius. Ripple willed a uh not the most int like Okay, what is the polite way to put this? What I think was a very retail driven idea um which is using XRP as a clearance currency, right? Obviously that's never going to work. You can't have like a volatile asset as a clearing currency. uh Ripple and Brad and David and that whole team willed this basically like silly idea which was using XRP as a clearance currency into reality by just I mean basically shilling this thing for years the token to go up using the capital and now building a massive war chest and

they are turning Ripple into a real business they will will it into existence this thing is a I would say I'll give them I will give them the most amount of credit because this which is what every foundation yeah should should be doing. There's another I I would say the other person who did this strategy is Sergey at Chainlink. Yes. Sergey turned a meme link which was a memecoin into a war chest of capital into a company that has hundreds of employees and does deals that are eight figure deals with L1's and L2s. You will know there's a there's a there's always a fake it till you make it kind of thing in every and there's a fine line of how you walk that. Yeah.

Yeah. Hidden Road is a legit extremely legitimate business. And um I mean this is the pitch for inversion quite literally. Build a war chest of capital and then acquire real businesses. And um I think this is genius. I think Brad I I don't care what people say about Ripple anymore or Brad Garlinghouse is a phenomenal operator. He not just in crypto. He might go down as one of the best pro like best evangelist. But just think about what we're saying. A year ago, I would have been like ragging on Ripple and ragging. This tells me that they're serious. This is a uh they they they might go and and become bigger than Ethereum. Yeah. I mean, we did this episode that you were on with um Charlie Noise from Paradigm and uh BAM, who just

raised for Mesh. They just raised 82 million from Paradigm and Stablecoin Clearing House. And I said, "Uh, what what are you seeing that I'm not seeing?" And he said, "Don't sleep on RLUSD. Don't sleep on Ripple stable coin." Um look and we talked about what other company gets mocked protocol large protocol gets mocked and doesn't get enough credit by by OG crypto uh you know uh uh uh purist other than Ripple other than Ripple there's one very obvious one Salana Tron oh yeah yeah yeah and I will give Tron credit where it's due instrumental boots on the ground of evangelizing

and and deploying so to speak USDT. Yeah. Like what percentage of USDT happens on Tron? What is it? 60% roughly. I'm probably getting that wrong. 60 70. Yeah. Yeah. And everyone everyone in crypto laughed at Justin and oh Justin and whatever. Yeah. But but you know again that that just tells you the reason why USDT has been so dominant in the stable coin market. They preserve basically 75% of all stable coins circulation. And I think, take a long-term view, that's if there's other players in the market that are going to be degraded. It's not necessarily them because they've been so focused on deploying it. Let me tell you why this Ripple acquisition is so interesting.

So, they're clearing 3 trillion annually. What database are they using to clear that? I don't know, either like Solano or Ethereum or an L2 or traditional databases or MongoDB or whatever. They're going to move that all onto the XRP ledger and they're going to clear those trades in RLUSD. And if you think about why Tether and USDC, the real usage of stable coins right now is a clearing mechanism for trading houses. Um, now there's some like real world adoption stuff like that in emerging markets for with Tether, but it's really just clearing um and and settling. And um yeah, I mean they're buying a platform that can then serve up their own stable coin. And look at Circle and Coinbase and Tether's

revenues.