Ripple CEO Brad Garlinghouse didn't pull any punches on Friday in an interview with CNBC when he denounced Strategy and its Chairman Michael Saylor's approach to funding bitcoin purchases.
"Financial engineering does not drive long-term value ... long-term value of any digital asset is going to be driven by utility," Garlinghouse said. "Team Michael Saylor wasn't focused on the right stuff and that has hurt the overall market."
Garlinghouse's comments come as bitcoin again traded below $60,000 on Friday. The Ripple executive added that he is bullish on bitcoin. His company, Ripple, is the leading advocate of another cryptocurrency, XRP.
The financial engineering Garlinghouse referred to on Friday appeared to revolve around Strategy's method of raising capital to fund more bitcoin purchases via preferred shares. The Ripple executive specifically pointed to Strategy's STRC stock trading 25% below its $100 par as an example of a flawed strategy. He characterized STRC's decline as a "damning indictment" of Strategy's approach.
For about a year, Strategy has been issuing preferred securities like STRC to fund additional bitcoin purchases. These preferred shares carry cumulative dividend obligations — 11.5% annually in STRC's case.
