Ripple, a San Francisco-based cryptocurrency company currently embroiled in a securities lawsuit with U.S. regulators, announced Wednesday it has purchased a Swiss startup for $250 million.
The company is acquiring Metaco, a crypto custody startup based in Lausanne, to expand its services for enterprise customers. Metaco, which will continue to operate independently, disclosed the price in a separate announcement.
It is Ripple's first major acquisition. The company told Reuters that it has $1 billion in cash on hand.
The deal positions Ripple among players from BNY Mellon bank to the Nasdaq stock exchange that are seeking to provide custody service to crypto-holding institutions. Crypto custody providers manage security keys and crypto assets on behalf of their customers.
"With this acquisition, Ripple will expand its enterprise offerings providing customers the technology to custody, issue, and settle any type of tokenized asset," Ripple said in the announcement, and "Metaco will dramatically accelerate its growth trajectory through access to Ripple’s established base of hundreds of customers, capital to address new demand, and resources to continue delivering on its commitment to banking and institutional clients."
The Swiss startup also appealed to Ripple precisely because it isn't based in the U.S., Reuters reported.
U.S.-based cryptocurrency companies, and their boosters, are broadly at odds with the Securities and Exchange Commission over the rules governing which types of tokens are considered securities.
"The probability is quite remote that any given platform has zero securities," SEC Chairman Gary Gensler said last year. "In my view, regulation both protects investors and promotes investor confidence, in the same way that traffic laws protect drivers and promote driver confidence. It’s at the core of what makes markets work."
Ripple is currently in a legal battle with the SEC, which sued the company in 2020, claiming the $1 billion of XRP tokens it sold were unregistered securities, a claim Ripple rejects.
Earlier this month, Ripple told CNBC that is would likely end up spending $200 million to fight the SEC's lawsuit. If the company loses the lawsuit, XRP will be kicked off of cryptocurrency exchanges.
Ripple's XRP, is the world's sixth largest cryptocurrency coin with a market cap of more than $23 billion, according to Coin Market Cap. Bitcoin remains the top cryptocurrency with a $530 billion market cap, followed by Ethereum at nearly $220 billion and Tether at around $83 billion.
