Ripple buys Swiss startup Metaco as conclusion of SEC lawsuit looms

  • Blockchain firm Ripple has acquired Metaco, a Swiss crypto custodial services company, the company announced on Wednesday.
  • The deal is expected to bolster Ripple’s product lineup and give it access to an attractive roster of customers including Citi and BNP Paribas.
  • It will also help the company increase its overseas presence as it battles a lawsuit from the Securities and Exchange Commission.

Ripple CEO Brad Garlinghouse speaks at the Milken Institute Global Conference in Beverly Hills, California on October 19, 2021.

Kyle Grillot | Bloomberg | Getty Images

Blockchain company Ripple announced on Wednesday that it has acquired Metaco, a Swiss company that securely holds digital assets on behalf of clients, in a bid to expand its international presence and expand its range of services.

News of the deal, one of the crypto industry’s biggest acquisitions in the last year or so, comes as the San Francisco-based startup continues to fight a lawsuit from the Securities and Exchange. United States Commission.

It also comes as the crypto industry as a whole faces a host of challenges, ranging from higher interest rates and tighter funding conditions to mass layoffs and falling corporate valuations.

“This is the biggest deal we’ve seen in the last year,” Ripple CEO Brad Garlinghouse told CNBC in a call Tuesday.

Ripple invested $250 million in cash on its own balance sheet to fund the acquisition, Garlinghouse said.

“At a time when others are closing their doors or facing layoffs, I think this is a very important signal for the industry, it’s also a signal that Ripple is in a strong position – we’re going to play offensive,” he added.

Ripple’s boss said the deal was a sign that it was still possible to make big deals even with the pressures the broader market is facing.

Garlinghouse said the deal would help the company grow its overseas presence at a time when the Securities and Exchange Commission is taking tough action against major industry players, including Ripple.

The crypto titan, valued at $15 billion in its latest round of private funding, has faced significant regulatory uncertainty after the SEC sued the company and two of its executives accusing them of unregistered securities.

The main claim of the regulator is that XRP, a cryptocurrency with which Ripple is closely associated, is akin to a security that should have been registered with the agency before being issued and sold to investors.

Ripple, for its part, denies that XRP should be treated as a security.

Founded in 2015 in Switzerland, Metaco offers a range of services aimed at helping financial institutions securely store, exchange, issue and manage digital currencies.

“We’ve partnered with this segment – banks, payment providers, throughout our history,” Garlinghouse said, adding that Metaco is “a good fit in terms of a strategic opportunity.”

“There are a lot of deals that people have been trying to make during this crypto winter – I think that will really be the hallmark of a crypto spring.”

Safe custody of crypto in segregated accounts has become a heightened priority for financial institutions looking to play a role in the industry following the collapse of FTX and many other notable crypto platforms.

Metaco counts among its customers several large financial companies, including Citi, BNP Paribas, BBVA and Société Générale.

Crypto companies have been playing poker with the US SEC, making bold threats to leave the country following harsh enforcement action by the agency.

Major players hope the SEC and Washington will take what crypto watchers see as bluffs seriously and soften the tough line regulators have taken on the industry.

Garlinghouse said last week that the company would have spent a total of $200 million defending against the SEC lawsuit.

The company’s legal battle with the US agency is expected to conclude later this year.

In an interview with CNBC on Tuesday ahead of the news, Garlinghouse said he expects the company to get a result in the legal fight within a few months.

“I think the most likely scenario is that we’ll hear (a decision) in two to four or five months,” Garlinghouse said.

SEC Chairman Gary Gensler has made it clear that the regulator has no plans to back down from its aggressive enforcement actions in the crypto space. Gensler insisted that existing securities laws already suit crypto well.

Some industry executives, however, believe the regulator’s actions are wrong. Many crypto industry insiders have called for a clear regulatory framework from the US Congress to help clarify for companies how they can operate in a legally valid way.

Ripple is now Metaco’s sole shareholder, the company said. Metaco will remain independent and its CEO Adrien Treccani will remain as CEO.

“This deal will allow Metaco to leverage Ripple’s scale and market strength to achieve our goals and deliver value to our customers at a faster pace,” Treccani said in a statement Wednesday.

“We look forward to continuing to meet unprecedented levels of institutional demand with the utmost excellence in delivery, as our clients have come to expect.”

SHOW: Ripple will have spent $200 million to fight SEC lawsuit, says CEO

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