Out of the 55 billion XRP Ripple locked in a series of escrows in 2012 using the XRP Ledger, 42 billion XRP remain in escrow as of April 2023.
In a Supplementary Brief on Remedies filed by the SEC as part of the LBRY-SEC case, the Securities Commission has asked the court to issue an injunction restraining LBRY Inc. from offering any unregistered offering of crypto assets securities, at least until the crypto company destroys its LBC token holdings.
Would the SEC push for Ripple’s XRP holdings to be burned?
Following this, Ripple’s XRP escrow has been a subject of discussion among some members of the XRP community with some asserting that the SEC could also file for Ripple to destroy their XRP holdings. The discussion began on Friday when a certain crypto enthusiast Jay V asked Ripple CTO whether he thinks XRP escrow would need to be destroyed or burned.
Think that xrp escrow will need to be destroyed too David? pic.twitter.com/jm51PTaBVt
— Jay’V🪬 (@JayVTheGreat) May 12, 2023
Although David Schwartz gave no response, several community members shared their thoughts on the question. Among those who reacted to Jay V’s call to burn XRP in Ripple escrows was popular crypto influencer Stefan Huber. According to Huber, Ripple cannot burn XRP in escrow, adding that neither the SEC nor the judge can compel the Silicon Valley tech company to do otherwise. “Ripple can’t burn the escrow, and neither the SEC nor the judge can do anything about it,” he remarked.
Reacting to another point raised by Jay V that validators can vote to have XRP tokens in Ripple escrow burned, Huber endorsed but noted that the SEC and the presiding judge in the XRP lawsuit have no authority over validators’ decisions.
Yes they can but the @SECGov and the judge have no authority over the validators. So they can just ask them friendly to please do it but that's it.
— Mr. Huber🔥🦅🔥 (@Leerzeit) May 13, 2023
Likewise, pro-XRP lawyer Bill Morgan agreed that the judge can give a ruling on Ripple’s escrow, adding that validators would not be bound by it. “She could make such an order but the validators would not be bound by it. She could extend it to them but they would need to be heard. Courts can’t randomly bind non-parties to permanent injunctions without those parties having a chance to be heard. It is not China,” he wrote.
While it became clear that the SEC would fail in any court attempt to have Ripple burn all XRP in their possession, Matt Hamilton, former Principal Developer Advocate at Ripple believes the cross-border payment firm can easily burn XRP in escrows if they want. According to Hamilton, one of the ways would be to disable the master key of the account that receives released tokens from escrow.
He tweeted, “The escrows are set to release to a particular address. Ripple could at any time disable the master key on the destination account. Thus rendering it inoperable. That is, when the funds [are] released from escrow they’d be inaccessible to anyone. Ripple could right now publicly and probably render their entire future escrow funds inaccessible to even themselves. To all intents and purposes burn them.”
It bears noting that Ripple CTO noted in a previous report that burning XRP would have no positive impact on the asset’s price, citing the XLM token burns. He added that the company will continue selling its XRP holdings to shred off all centralization claims on the XRP project.
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