Ripple CEO Brad Garlinghouse has openly criticized Strategy (NASDAQ: MSTR) and Executive Chairman Michael Saylor over the company’s Bitcoin financing strategy, arguing that its highly leverag
Ripple CEO Brad Garlinghouse has openly criticized Strategy (NASDAQ: MSTR) and Executive Chairman Michael Saylor over the company’s Bitcoin financing strategy, arguing that its highly leveraged structure has become a risk for the broader cryptocurrency market.
Speaking in a recent CNBC interview, Garlinghouse said the model that fueled massive Bitcoin purchases during the bull market is now working in reverse as market conditions deteriorate.
His comments come as Strategy’s preferred stock, STRC, continues to trade well below its intended $100 par value, raising fresh concerns among investors about the sustainability of the company’s capital structure.
Related: Mark Zuckerberg eyes another billion-dollar market
Over the past several years, Strategy transformed itself into one of the world's largest corporate Bitcoin holders by repeatedly raising capital through convertible debt, preferred shares, and other financing instruments before purchasing additional BTC.
While this approach significantly increased demand for Bitcoin during the market's strongest rallies, Garlinghouse believes the same mechanism can intensify downside pressure during bearish periods.
Referring to Strategy’s financing model, he said:
“I think because they used leverage — Michael Saylor would probably describe it differently than leverage in the strictest sense. But at the end of the day, it was leverage. And then you see how that can become negatively reinforcing at one point.”
His remarks reflect a broader debate within the crypto industry over whether aggressive corporate leverage ultimately strengthens or destabilizes Bitcoin’s long-term market structure.
Related: Ripple reports explosive 2200% surge in tokenized assets
Much of Garlinghouse’s criticism focused on STRC, one of Strategy’s preferred share offerings. The security was designed to trade near its $100 par value, but it lost that level earlier this month and has continued to decline sharply.
With shares recently trading around $74.54, STRC has fallen more than 25%, a move that many market participants interpret as declining confidence in the company’s financing strategy.
According to Garlinghouse, this deterioration sends an important signal.
“I think Team Michael Saylor has not been focused on the right things. And I think that has hurt the overall market. When Strategy became a seller for the first time in a long time, that was noticed.”
During the bull market, Strategy’s ability to raise capital, purchase Bitcoin, and use the premium of its own stock to secure additional financing created a self-reinforcing cycle that many investors viewed as one of the strongest institutional demand drivers for BTC.
Garlinghouse argues that the process can reverse just as quickly once market sentiment weakens.
Describing STRC’s decline below its intended trading level, he called it “a pretty damning indictment” of the structure itself.
He added:
“The challenge is that Strategy created incremental euphoria on the way up. Now you're seeing that same effect amplify on the way down.”
Although Garlinghouse was highly critical of Strategy’s financing approach, he made clear that his comments were not directed at Bitcoin itself.
Instead, he argued that sustainable value in digital assets comes from real-world adoption rather than increasingly complex financial products.
“Financial engineering does not create long-term value. I said on CNBC five or six years ago that the long-term value of a digital asset is determined by utility. If it solves a problem at scale for real customers, then liquidity, demand, and trust in that asset will follow.”
The Ripple CEO has long maintained that blockchain networks capable of supporting cross-border payments and enterprise applications will ultimately outperform projects driven primarily by speculation.
Despite his concerns surrounding Strategy, Garlinghouse emphasized that he remains optimistic about Bitcoin’s long-term prospects.
During the interview, he referenced Warren Buffett’s well-known investment philosophy that investors should be fearful when others are greedy and greedy when others are fearful, suggesting that periods of market pessimism often create attractive long-term opportunities.
Bitcoin recently slipped below the psychologically significant $60,000 level amid broader weakness across digital assets. At the time of writing, BTC is trading at around $60,035, according to CoinGecko.
