Dealing with rumors is a difficult challenge for PR teams, but denying true rumors is a challenge in the long run.
In mid-September 2021, it was reported that Ripple Labs was looking to build a market-making platform.
A person familiar with the matter allegedly told Coindesk that Ripple was employing up to ten people, including a crypto trader with experience arbitrage between different exchanges and a marketing executive tasked with building relationships with liquidity providers and exchanges.
Ripple was also found to hire an institutional market analyst. The job posting stated that “Ripple’s vision of an Internet of Value requires efficient digital assets and a healthy crypto market, and strong liquidity is a key component to making this vision a reality.”
A Ripple spokesperson denied the report that the company has plans for a market maker platform.
Nearly two months later, the blockchain specialist and XRP creator announced the upcoming launch of the Ripple Liquidity Hub.
The platform will initially support BTC, ETH, LTC, ETC, BCH and XRP. In the future, Ripple plans to add functionality such as caching and revenue generation functions.
According to the announcement, the same technology has been supporting Ripple’s On-Demand Liquidity (ODL) product for nearly two years, but will be made available as a customer-oriented product.
This means Ripple will provide aggregated access to cryptocurrency market makers, exchanges, and enterprise OTC desks, with the first announced alpha-issue partner Coinme: a Bitcoin ATM company licensed in the United States, with thousands of locations across the country.
The turnkey solution is expected to help financial institutions accelerate the transition to crypto, and will benefit from smart demand routing for sourcing digital assets at optimized rates from market makers, exchanges and OTC desks.
Organizations can use the Ripple Liquidity Hub to provide their end customers with the ability to buy, sell and hold digital assets at the best possible prices across a range of venues.
The company also wants to resolve specific weaknesses of enterprise customers such as avoiding lengthy and resource-heavy mergers through a streamlined API, and eliminating pre-funding requirements in order to free up working capital.
The definition of a market-making platform and liquidity position may not always match, but it appears that Ripple chose to simply deny the rumors back in September to avoid scrutiny of a project that is still at a very early stage.
However, denying rumors that are often true can backfire. Especially for companies within the digital asset ecosystem, a space that faces extreme volatility on a daily basis.
The rumors about the market making platform were denied and forgotten. After that, Ripple announced its liquidity position and all is well. The problem is that the following rumor will be taken more seriously because the latter was true and rejected.
This just illustrates the importance of having a strong communications team and how it can impact the company in the long run. “No comment” is usually the best way to deal with this type of rumour. We hope Ripple has learned its lesson.