Grayscale says it will dissolve XRP Trust, citing market reaction to SEC lawsuit


Digital asset investment firm Grayscale is moving to dissolve the XRP Trust — a move that comes days after it announced the liquidation of XRP positions from its Digital Large Cap Fund.

In a press statement circulated Wednesday, Grayscale cited the decision by the Securities and Exchange Commission to file suit against Ripple last month, in which it argued that the digital asset XRP is a security under U.S. law.

"In response to the SEC’s action, certain significant market participants have announced measures, including the delisting of XRP from major digital asset trading platforms, resulting in the Sponsor’s conclusion that it is likely to be increasingly difficult for U.S. investors, including the Trust, to convert XRP into U.S. dollars, and therefore continue the Trust’s operations," Grayscale said Wednesday, adding:

"In connection with the dissolution, the Sponsor has liquidated the Trust’s XRP and intends to distribute the net cash proceeds to Trust shareholders, after deducting expenses and providing appropriate reserves and subject to any applicable withholding. The Trust will terminate following distribution of the net cash proceeds."

As previously reported, numerous market-facing crypto firms have moved to draw distance between themselves and XRP. The looming SEC dispute sparked an investor lawsuit from Tetragon Financial Group, which invested in Ripple's Series C funding round.

Still, as The Block reported earlier Wednesday, regulators in non-U.S. countries have thus far taken a different tack in their determinations about the status of XRP. Japan, for example, considers it to be a cryptocurrency under its payments services-related laws.

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Aug 11, 2021, 5:18PM UTC