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Key Takeaways
Ripple CEO Brad Garlinghouse said Strategy's leveraged Bitcoin strategy has hurt the crypto market despite his bullish BTC outlook.
Peter Schiff accused Michael Saylor of making misleading claims after STRC fell nearly 29% below its $100 par value.
Strategy faces mounting pressure with over $13 billion in unrealized Bitcoin losses, $1.2 billion in annual dividend obligations, and a shrinking dividend coverage window.
Ripple CEO Brad Garlinghouse went on CNBC's Squawk on the Street on June 26 with a message that was precise in its targeting. He is still bullish on Bitcoin, but he is not bullish on what Strategy has built around it.
"Financial engineering does not drive long-term value," Garlinghouse said. "Team Michael Saylor wasn't focused on the right stuff, and that has hurt the overall market."
His specific exhibit was STRC, Strategy's Variable Rate Series A Perpetual Stretch Preferred Stock, which carries an 11.5% annual dividend and is engineered to trade near $100. At the time of Garlinghouse's remarks, STRC was trading around $74, approximately 26% below par. He called that gap "a pretty damning indictment."
The leverage critique was equally direct. Garlinghouse argued that Strategy's model amplified gains during Bitcoin's rally and is now amplifying the damage on the way down.
"I think because they were using leverage, you start to see that in a place that can actually compound negatively," he told CNBC. His alternative thesis, that lasting crypto value comes from utility rather than financial structure, connects directly to Ripple's own positioning.
Ripple processed nearly $16 trillion in payment and prime brokerage volume last year through XRP-powered infrastructure. Whether digital assets were the actual settlement layer for the bulk of that volume is a figure Garlinghouse acknowledged remains small but frames as the addressable opportunity.
Peter Schiff escalated the same argument further. In a post published this week, Schiff accused Saylor of making statements that crossed from promotional into materially misleading territory.
The specific claim Schiff flagged: in a recent interview, Saylor described the digital credit instruments Strategy creates as equivalent to "a bank account with no stress and no volatility that pays 10%." Schiff's response was direct. "That's materially false and misleading. Last week STRC fell by 18% and traded as low as 28.75% below par."
Schiff's criticism centered on a specific claim. Describing a financial instrument that fell 18% in a week and traded nearly 29% below par as having "no volatility" conflicts with its observed market performance.
While Schiff did not call for regulatory action, his description of the statement as "materially false and misleading" uses language commonly associated with securities law and investor disclosure standards.
Neither Garlinghouse nor Schiff is making these arguments in a vacuum. Strategy holds more than 843,000 BTC purchased at an average acquisition cost of approximately $75,646 per coin. With Bitcoin trading near $59,000 to $60,000 at time of writing, the company carries over $13 billion in unrealized losses on its primary asset.
Annualized dividend obligations across Strategy's preferred share classes have climbed to approximately $1.2 billion. The dividend coverage window has narrowed from more than seven years at the start of 2026 to roughly 14 months. In May, Strategy sold 32 BTC, its first Bitcoin disposal in years, specifically to fund an STRC dividend payment, a detail that Garlinghouse cited as evidence that the model's internal logic is under real strain rather than theoretical pressure.
Strategy is also under a securities investigation opened earlier in 2026, a regulatory overhang that adds a further layer of institutional uncertainty to an already pressured balance sheet. Saylor's public response to the criticism this week was characteristically defiant.
He posted that "digital credit is income for investors who believe in Bitcoin" and described severe market drawdowns as a test of conviction rather than a reason to reconsider. Strategy has not formally responded to Schiff's specific allegation of materially false statements.
The 25% to 29% discount on a preferred stock with an 11.5% dividend is the market's live assessment of the probability that Strategy can sustain those payments. A preferred stock trading at par implies the market believes dividends are secure and the instrument's terms will be honored.
A 25% discount to par implies the opposite: that the market is pricing in meaningful risk that the 11.5% yield either will not be paid in full or will require conditions, specifically a higher Bitcoin price, that are not currently in place.
STRC is not a bank account, nor is it free from stress or volatility. It is a preferred stock issued by a company with more than $13 billion in unrealized Bitcoin losses, $1.2 billion in annual dividend obligations, and a dividend coverage window of about 14 months. Yet Michael Saylor this week compared it to a savings account paying 10%. The market tells a different story. STRC is trading nearly 29% below its $100 par value.
