Ripple CTO David Schwartz Warns: Secondary-Market Risks You Can’t Ignore Before Buying
Ripple's Chief Technology Officer just dropped a reality check for anyone eyeing secondary-market shares. David Schwartz isn't mincing words about the hidden pitfalls lurking off the main exchange.
The Fine Print They Hope You'll Skip
Forget the hype. Schwartz lays out the cold, hard risks: liquidity traps, valuation mismatches, and regulatory gray areas that could turn your investment thesis to dust. It's the classic finance play—sell the dream, bury the disclaimer in paragraph eight.
Why This Isn't Your Typical Crypto Volatility
This isn't about price swings. It's about structural hazards. When you buy secondary, you're bypassing official channels and betting on a chain of trust you can't audit. One broken link, and your equity story evaporates.
The Professional's Verdict
Schwartz cuts through the noise with a technician's precision. His warning serves as a stark reminder: in the rush for exposure, even savvy investors can get caught holding the bag on promises that were never meant to be kept. Always do the homework the sales pitch conveniently forgets.
Ripple’s latest $500 million share sale has stirred up fresh IPO chatter, but just as the excitement picked up, Ripple CTO David Schwartz stepped in with a reminder that buying private company stock, Ripple or otherwise, is not as straightforward as many think.
And he made his point with six clear risks investors often overlook.
Why Big Money Showed Up for Ripple
Ripple’s recent round valued the company at $40 billion and drew in major names like Citadel Securities, Fortress Investment Group, Galaxy Digital, Brevan Howard, Pantera Capital, and Marshall Wace. These investors secured unusually strong protections.
They have “the right to sell their shares back to Ripple after three or four years at a guaranteed 10% annual return,” unless Ripple goes public before then. If Ripple wants to buy the shares back sooner, it must offer a 25% annualized return.
Add a liquidation preference on top, and it’s clear this was a deal designed for safety.
Schwartz‘s Warnings
As users online began asking how to buy Ripple shares, some even wondering if they could use XRP, Schwartz responded with a neutral but firm explanation. This wasn’t about Ripple specifically, he emphasized. It was about the reality of private markets.
His first warning: pricing data is shaky. Secondary brokers “are notorious for giving you misleading (or even outright false) information,” he said, explaining that even platforms like Notice and Hiive aren’t fully reliable.
He also noted that buyers are usually the only ones pushing for a fair price. Brokers earn more when the price rises, and sellers want the same outcome. “The broker is not on your side,” he said.
The Hidden Friction in Private Stock Deals
Schwartz pointed out that investors get almost no real company information, and most of the time, they’re buying from insiders who naturally know more. Deals can drag on for weeks because of ROFR steps and company approvals. During that wait, the company’s outlook can shift, leaving the buyer stuck.
And then there are the fees: 5% charged to both sides. As Schwartz explained, buyers end up “paying about 10% too much,” even when everything else goes right.
IPO or Not, the Market Is Watching
Crypto fundraising has already hit $23 billion this year, boosted by a friendlier political environment. But recent listings haven’t gone smoothly – Circle and others that went public in 2025 have seen sharp declines. Ripple again stressed it has “no plan, no timeline” for an IPO.
Still, as long as Ripple keeps making moves that draw Wall Street’s attention, the IPO conversation won’t go away. And Schwartz’s message stands as a reminder: enthusiasm is fine but just know what you’re stepping into.
