Key facts
- Ripple CEO Brad Garlinghouse criticized MicroStrategy's strategy of using preferred stock sales to fund Bitcoin purchases.
- Garlinghouse argued that financial engineering does not drive long-term value and that utility is key for digital assets.
- He suggested MicroStrategy's approach has negatively impacted the broader cryptocurrency market.
- MicroStrategy's STRC preferred shares have fallen significantly below their $100 par value.
- STRC carries an 11.5% cumulative annual dividend obligation.
- MicroStrategy's common stock (MSTR) also experienced a notable decline.
Ripple CEO Brad Garlinghouse has publicly criticized MicroStrategy's strategy of using financial engineering, specifically preferred stock sales like STRC, to fund its Bitcoin acquisitions. In an interview with CNBC, Garlinghouse argued that such methods do not drive long-term value and that utility is the key driver for digital assets. He suggested that MicroStrategy's approach has negatively impacted the broader cryptocurrency market.
Garlinghouse highlighted the significant drop in MicroStrategy's STRC preferred shares, which trade below their $100 par value and carry an 11.5% cumulative annual dividend obligation, as evidence of the model's weakness. This criticism comes as MicroStrategy's capital structure faces increasing scrutiny. Earlier this week, analytics firm CryptoQuant advised MicroStrategy to halt further Bitcoin purchases and focus on building cash reserves.
The pressure on MicroStrategy's securities has intensified with the recent decline in Bitcoin's price. STRC touched a new low, trading as much as 26% below its par value. The company's common stock, MSTR, also fell to its lowest point since February 2024, closing around $82 on Friday, as investors continue to assess the company's leveraged Bitcoin accumulation strategy.