A report from the media Axios states that an unknown startup named Valor Foundation is attempting to launch a hostile takeover of cryptocurrency XRP. This would be the first attempt at hostile acquisition in the cryptocurrency space.
The alleged acquisition plans of Valor
Valor Foundation, a nonprofit San Francisco-based association that aims to serve the unpaid citizens of developing nations using cryptocurrency, according to reports in the "early stages of attempting a hostile takeover of XRP" , according to leaked information received from Axios.
In 2018, Valor expected to raise $ 160 million through an initial offer of coins (ICO) but failed to convince investors that he could complete his mission. Now, second Axios, the company is instead aiming to raise funds to take the upper hand XRP to help him become a leader in remittances in emerging markets.
The point of sale has explained that Valor plans to raise tens of millions of dollars, which would be used to shorten the XRP to push the price down. This collection of funds would be conducted using a debt instrument, not a symbolic sale. Then, Valor will set the XRP code to assign a Valor token to each available XRP holder. Finally, Valor will distribute other Valor tokens to their community and incentivize XRP holders to sell their Valor token coins to complete the acquisition.
While this scenario seems a bit far-fetched, Axios reported that the founder and CEO of Valor, Vishal Harpalani, has confirmed to the press that his company is, in fact, working on a hostile takeover of a top ten cryptocurrency. However, he refused to mention which one.
Ripple Executives denies acquisition requests
The guide of Ripple, the startup supported by VC behind the XRP digital currency, responded quickly to discredit rumors about a possible acquisition of XRP.
Brad Garlinghouse, CEO of Ripple, responded to the fire Axios business editor, Dan Primack, on Twitter and shared his views on the quality of cryptographic media. he tweeted:
"[Dan Primack] wants to sell snake oil [any] buyers out there !? The media have a responsibility to help the industry understand that it is the hype against the substance, not to propagate blatant attempts to manipulate the market. When will the media coverage of this sector mature? "
Ripple CTO, David Schwartz, tweeted"It's funny." A hostile takeover of XRP Ledger is not technically possible, nor is this plan making economic sense. "
Takeover XRP highly unlikely
While the idea of "hostile takeovers" in the cryptocurrency space is not entirely unlikely, it is highly unlikely that a small unknown startup will successfully conduct a hostile takeover of the second largest cryptocurrency on the market.
While an investor with deep pockets could probably shorten the XRP (or any other altcoin) to lower his price, it would make little sense from an economic point of view to attempt to take over a competing cryptocurrency if the funds for such an attempt could instead be used to develop a superior cryptocurrency network. This would probably lead to a more favorable result that involves less risk than a hostile takeover attempt.
Furthermore, in order for the hostile takeover proposed by Valor to function, existing XRP holders should purchase the idea of the Valor token and its planned ecosystem and simultaneously reject XRP. This is a highly unlikely scenario given the track record of XRP and Ripple and the position of the project as an important cryptocurrency enterprise.
In addition, the more than 100 companies that already use Ripple technology, some of which also use XRP, should change their mind about the adoption of the payment network, which will most likely help them to reduce costs and increase their revenue. efficiency of payments. Again, a highly unlikely scenario.
Finally, from a technological point of view, this attempt to acquire XRP may not be executable, which makes the whole "loss" rather suspicious. It is not clear if this escape was an attempt by the short sellers to make a "quick buck" or the way Valor made a name in the space of the cryptocurrency.
Also Axios recognizes the unreliability of its source, stating:
"We do not know if any of this information has been leaked, directly or indirectly, by short sellers who are hoping to reduce the price of XRP, and we do not know if the people involved with Valor have an XRP exposure."
However, the release of the media could have made an effort to gather expert opinions on the possibility and probability of this alleged acquisition attempt, as well as to cover the information contained in the apparent loss in a less sensationalist and one-sided way.
Possible hostile acquisitions of cryptocurrencies?
While the Valor-XRP story may just be vaporware, hostile cryptocurrency acquisitions could very well become part of the ongoing cryptoasset ecosystem.
Andy Bromberg, co-founder and president of CoinList, provided a theoretical example of how a hostile takeover of a digital token might appear a blog post published in March 2018.
Bromberg suggests the following scenario of hostile acquisition:
A company that launched a cryptocurrent competing with an existing project would first have to encourage miners to extract their token. Subsequently, the company should warn the owners of the cryptocurrency of the launch of their new network that will be created by a fork of "their" cryptocurrency and convince them of the advantages deriving from the adhesion to its new user and community base. . Thus, the company would have bifurcated the code of its destination cryptocurrency and simultaneously created a pool of incentives.
The funds in the incentive pool would then be transferred to the holders of the old cryptocurrency as a reward for having burned their old tokens. Older tokens would be burned by a user, the more tokens they will receive. In this way, more users enter the new network, more users of the old network are incentivized to follow.
Finally, the hostile takeover company may sell the accumulated holdings of the old cryptocurrency to deliver the final blow to its acquisition target.
If the new network managed to gain critical mass after the rigid fork is airdrop, could replace the old cryptocurrency with its native cryptocurrency.
The hostile acquisitions in the cryptomarkets provide an interesting, though currently only theoretical, case of the use of traditional business tactics applied in tomorrow's decentralized digital economy.