Crypto enthusiasts have ample reason to be concerned about the future of Ripple Labs and its ripple (XRP) currency as the controversy rocking its core foundation continues to escalate.
Ripple allows for the transmission of payments of different forms of value across its network. XRP is effectively 100% “pre-mined”. 100 billion XRP were created, 20% of which were retained by the founders, 25% by the company and the remaining 55% released to the public. This allocation has long been a source of controversy in the crypto world, with the founders seeking to reassure the community that they’ll return their stakes as the technology matures.
Jed McCaleb, also the brains behind MtGox, developed the contemporary version of the Ripple system in 2011, based off its earlier prototype founded by Ryan Frugger in 2004. On May 22, McCaleb caused shockwaves in the community when he announced through the community’s message board that he plans on selling his entire stake. He did not get into details.
Following McCaleb’s announcement, XRP lost half its value over a span of two days. Since peaking near $0.06 during December’s volatility, XRP has been in a steady state of decline. It now trades near $0.004, a decline of 93%. It now ranks 7th in market cap with a total worth of $32 million.
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Jesse Powell, founder of Kraken, joined Ripple at the same time as McCaleb. Three days ago, he announced his resignation from the company via reddit. He expressed his disapproval at the direction being taken by the company, led by Chris Larsen who joined as CEO in 2012:
“Prior to Jed’s departure from Ripple, I had asked the founders to return their XRP to the company. Jed agreed but Chris declined—leaving a stalemate. This afternoon, I revisited the allocation discussion with the pair and again, where Jed was open, Chris was hostile.”
Not long after, Powell received a Demand to Cease and Desist, and retract his “libel”. The letter came from George Frost, legal counsel representing Ripple Labs. It threatened that if he does not comply within three days, the letter will be posted on reddit. Of particular issue is Powell’s assertion that Larsen refuses to return his XRP, which Frost maintains is untrue.
Powell beat them to it. The full letter and Powell’s rebuttal can be found here. The rebuttal is lengthy and ends with some interesting pieces:
“Chris’ management style has botched at least one acqui-hire and cost the company several high caliber employees. It has also cost at least one board member other than myself. How many settlement deals has the company made? How many non-disparagement agreements have been signed? I wasn’t going to get the dirt out but you threw first.”