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SEC vs. Ripple Lawsuit Sparks Controversy: Could Burning XRP Escrow Expedite Resolution?

The escalating legal dispute between Ripple and the U.S. Securities and Exchange Commission (SEC) has triggered speculation on Twitter regarding the potential destruction or “burning” of Ripple’s XRP escrow account. This escrow account houses a substantial amount of XRP, exceeding 42 billion tokens. The Twitter discussions revolve around whether such an action could strengthen Ripple’s case and expedite a resolution to the lawsuit.

The catalyst for this deliberation was a Supplementary Brief on Remedies filed by the SEC in its lawsuit against LBRY, a cryptocurrency startup. The brief proposed that LBRY be prohibited from conducting unregistered offerings of its native token, LBC, until it destroys its existing token holdings. Token burning, a concept well-known in the crypto space, was suggested as a means of destruction.



David Schwartz, Ripple’s Chief Technology Officer, weighed in on the matter, primarily addressing the developments in LBRY’s case. In response to a user’s question about whether Ripple would have to destroy its XRP escrow account to reach a settlement with the SEC, Twitter users highlighted the impracticality of such an action.

One Twitter user mentioned that Ripple could theoretically render their entire future escrow funds inaccessible, effectively “burning” them beyond use. However, it was noted that this wouldn’t be a straightforward process for Ripple to execute.

According to Twitter users, if Ripple were required to destroy the XRP escrow, they could potentially urge network validators to initiate a token burn, eliminating the 42 billion XRP held in the escrow account as of May 1, 2023. Nevertheless, the consensus among users was that burning the tokens would not be a simple undertaking.

Ripple would need to either persuade validators to comply with the judge’s ruling or redirect the monthly release of 1 billion XRP from the escrow account to an address without a key. Without a master key, the account would become inoperable, effectively rendering the tokens inaccessible to anyone and akin to being burned.


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