- Garlinghouse says real utility, not financial engineering, drives long-term value.
- He called STRC at 25% below its $100 par value a damning indictment of Strategy.
- Garlinghouse said Ripple’s payments business offers more durable value than Strategy’s model.
Ripple CEO Brad Garlinghouse used a CNBC appearance on Friday to criticize Strategy and its chairman, Michael Saylor, arguing that financial engineering built on leverage and preferred equity issuance is undermining both Strategy and the broader Bitcoin market.
“Financial Engineering Does Not Drive Long-Term Value”
Garlinghouse was open in his assessment of Strategy’s model. “Financial engineering does not drive long-term value,” he said. “Long-term value of any digital asset is going to be driven by utility.” He added that he had made this argument publicly before, saying the same thing on CNBC roughly six years ago.
His view is that sustainable value in any digital asset ultimately comes from solving a real problem at scale for real customers, building liquidity, and earning trust over time. Those factors compound positively. Borrowing money to buy more Bitcoin, in his view, is not that.
STRC at 25% Below Par Is a “Damning Indictment”
Garlinghouse pointed specifically to Strategy’s STRC preferred stock as evidence that the approach is failing. STRC, which carries a cumulative annual dividend obligation of 11.5%, dropped to a record low on Thursday, falling as much as 26% below its intended $100 par value. Strategy’s common shares also fell to their lowest levels since February 2024 as Bitcoin slipped to $58,000.
Garlinghouse called the STRC decline a damning indictment of Strategy’s approach, arguing that preferred equity issued to fund Bitcoin purchases creates leverage that can compound negatively when prices fall. He said Saylor was focused on the wrong things and that this has hurt the overall Bitcoin market.
Bullish on Bitcoin, Not the Strategy Around It
Despite his criticism, Garlinghouse said he remains personally bullish on Bitcoin. His argument is not against the asset itself but against the financial structure Strategy has built around it. He invoked Warren Buffett’s well-known principle of being fearful when others are greedy and greedy when others are fearful, suggesting the current moment is one where patience rather than leverage is the appropriate posture.
Ripple’s Own Numbers
Garlinghouse also contrasts Strategy’s approach with Ripple’s own trajectory. He said Ripple cleared $16 billion in payments last year, pointing to the efficiency of blockchain infrastructure for institutional use cases as the model he believes actually builds durable value. He referenced the ease with which digital assets can move large sums across borders, comparing it to Germany’s central bank reportedly taking two years and over a billion dollars to physically move $300 billion worth of gold.
Ripple is the primary backer of XRP and has long positioned itself around cross-border payment utility rather than treasury accumulation. Garlinghouse also referenced recent acquisitions the company has made, describing the current environment as one of tremendous opportunity for firms focused on building real infrastructure rather than financial engineering.
Related: Strategy Eyes STRC Dividend Hike Amid Bitcoin’s Continued Drop
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