Garlinghouse Blasts Saylor’s Preferred-Stock Bitcoin Model as “Financial Engineering”

Ripple CEO says Strategy’s funding approach has damaged crypto market, but remains bullish on bitcoin

Brad Garlinghouse, CEO of Ripple, criticized Michael Saylor’s preferred-stock funding model for bitcoin accumulation on Friday, calling it “financial engineering” that has harmed the broader crypto market.

Speaking on CNBC on June 27, Garlinghouse separated his criticism of the funding mechanism from his bullish stance on bitcoin itself. “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.”

Strategy, the company operating the preferred-share model, has issued shares carrying an 11.5% annual dividend for roughly one year to raise cash for bitcoin purchases. The preferred shares, ticker STRC, are engineered to trade near $100. On Thursday, June 26, STRC hit a record low and fell 26% below par value. By Friday’s close, Strategy common stock traded around $82.

Garlinghouse called the STRC decline a “damning indictment” of the model. When preferred shares trade below $100, the engine for issuing new shares and purchasing bitcoin stalls, forcing Strategy to pause accumulation. CryptoQuant, a crypto analytics firm, has recommended that Strategy pause bitcoin buying and rebuild cash reserves.

The preferred-share structure had provided a 7-year cushion on dividend coverage when it launched. That window has compressed to 14 months, Bitcoin itself fell below $59,000 during the period covered by Garlinghouse’s comments.

Mark Palmer, an analyst at Benchmark-StoneX, offered a more measured assessment. Palmer characterized the funding engine as “less efficient” rather than broken, and rejected comparisons to assets that have collapsed outright. The disagreement highlights a broader debate over whether Strategy’s model represents a fundamental flaw or a temporary liquidity challenge.

Strategy has not publicly responded to Garlinghouse’s criticism. The preferred-share program was engineered to trade at $100, but sustained trading below that level undermines the mechanism’s ability to function as designed.

Garlinghouse’s comments mark a rare public criticism of Saylor’s bitcoin strategy from a major crypto executive. The Ripple CEO’s distinction between the funding model and bitcoin’s long-term prospects reflects a common position in the industry: skepticism of the vehicle does not necessarily imply skepticism of the asset.