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Has Bitstamp Rug Pulled The XRP Community?
In a dramatic turn of events, Dr. Artur Kirjakulov, the CEO and founder of XPMarket, has accused Bitstamp of executing a “rug pull” against the XRP community. This serious allegation has sparked a heated debate among industry stakeholders, raising significant questions about the stability and reliability of Bitstamp’s involvement in XRPL-based financial instruments.
Dr. Kirjakulov’s Accusations
On Sunday, November 17, Dr. Kirjakulov expressed his concerns on X about Bitstamp’s recent actions. He claimed that Bitstamp “literally has just rug pulled the XRPL community,” alleging that the company withdrew more than 90% of liquidity from USD/XRP and BTC/XRP AMM Pools. This “silent” and unannounced move has placed the XRPL community in a precarious situation.
The lack of any formal statement from Bitstamp or RippleX has only intensified the uncertainty surrounding this liquidity withdrawal. This situation could potentially lead to “extremely volatile” trading conditions and significant price impacts for these asset pairs.
The Ripple and Bitstamp Connection
Dr. Kirjakulov further highlighted the complex relationship between Ripple and Bitstamp, noting that “Ripple owns an equity share in Bitstamp.” This connection suggests that Ripple’s stake in Bitstamp may influence the exchange’s strategic decisions within the XRPL space. The CEO of XPMarket expressed deep concerns about the assurance of a 1:1 conversion rate for Bitstamp-issued wrapped assets, drawing a parallel to the Stably incident where such guarantees were not honored. He emphasized the negative optics of such moves, questioning the trustworthiness of DeFi on XRPL when official partners engage in actions that may undermine community confidence.
Community Reactions and Counterarguments
The allegations did not go unnoticed within the XRPL community. Daniel Keller, CTO at Eminence and an XRPL ambassador, responded with skepticism regarding the authenticity of Kirjakulov’s claims. Keller questioned the legitimacy of the accounts associated with the liquidity pools, pointing out that the activation sequence originated via Binance, which seemed unusual if Bitstamp was managing it.
Dr. Kirjakulov’s Defense
In response, Dr. Kirjakulov maintained that the accounts were indeed affiliated with Bitstamp. He asserted that these accounts were clearly associated with Bitstamp because they were also involved in market-making for these tokens. According to him, there was no one else interested in market-making these niche and unpopular tokens.
He further explained that the liquidity had been redirected to a market-making account, reinforcing his assertion of Bitstamp’s direct involvement. Kirjakulov dismissed the significance of activation accounts, explaining that he activates his account from multiple exchanges to make it less traceable.
Calls for Evidence
Keller pressed for more concrete evidence to support the claims, asking for connecting transactions. He emphasized the importance of an activation account for an exchange supporting a liquidity pool, as it assures users of the company’s involvement.
Dr. Kirjakulov responded by highlighting the strength of the circumstantial evidence pointing towards Bitstamp, stating that no one else holds such a substantial amount of these assets issued by them, except for someone affiliated with Bitstamp. He argued that circumstantial evidence should not be ignored.
Bitstamp’s IOU Services Under Scrutiny
The conversation extended to the topic of Bitstamp’s IOU services. Michael Nardolillo, a user on X, defended Bitstamp by emphasizing its regulated status and the redeemability of its IOUs. He argued that the lack of a guarantee for IOUs would be akin to suggesting that one cannot withdraw crypto from an exchange. Nardolillo highlighted that Bitstamp is highly regulated, and its IOUs are always redeemable, equating them to holding an asset on an exchange.
Skepticism and Industry Failures
Kirjakulov met this defense with skepticism, drawing attention to past industry failures. He referenced the FTX creditors’ situation and the Stably incident, where a 1:1 conversion was not honored. Kirjakulov pointed out the absence of any official statement from Bitstamp or even GateHub sources claiming there would be a 1:1 conversion, and no proof of funds.
In an attempt to substantiate his defense, Nardolillo shared a screenshot from Bitstamp’s website detailing their IOU service. The screenshot outlines that users can transfer value on the XRP Ledger through IOUs issued by Bitstamp in exchange for real assets like BTC, USD, EUR, or ETH.
Concerns About Conversion Rates
Dr. Kirjakulov highlighted a critical oversight in this arrangement. He noted that the swap mechanism is the only way to make the exchange and questioned the potential for depegging. He asked what would happen if the value dips by 50%, inquiring whether Bitstamp would still honor the conversion of 1 bUSD (worth 50 cents) to 1 USDT (worth 1 USD).
Awaiting Bitstamp’s Response
As of the current time, the XRP community is eagerly awaiting an official response from Bitstamp regarding these serious allegations. Meanwhile, XRP traded at $1.15, with the market closely monitoring developments.
The unfolding situation continues to be a topic of intense discussion and scrutiny, with stakeholders and community members keenly observing how Bitstamp and other involved parties will address the concerns raised.
