Due to the recent news of Jed McCaleb and his XRP contract, this article has been created to give an overview of the relationship between XRP and McCaleb. It will include a brief history of McCaleb and Ripple as a collective, with a look at Jed’s XRP selling contract and a conclusion of the matter at hand.
In 2013, Jed McCaleb left Ripple. The software developer from Washington County, at the time, CTO of Ripple, headed towards the exit door to form his new cryptocurrency project: Stellar. This exit was seven years ago, although some believe McCaleb casts a shadow over the XRP community due to the financial technicalities of his departure.
The Creation of Ripple
When Ripple was created, it was the dream team. Jed McCaleb was building the consensus network alongside current CTO David Schwartz – before Ripple, Schwartz had been doing various work, such as integration work for the NSA. In 2012, McCaleb also managed to convince the CEO of Kraken, Jesse Powell, to invest in Ripple. The team was complete: David Schwartz, Chris Larsen and Jed McCaleb with the backing of Jesse Powell.
4.7 Billion XRP – the numbers
Jed McCaleb co-founded OpenCoin in 2012 (OpenCoin was renamed Ripple in 2015) with Chris Larsen. McCaleb had recently sold the now defunct MT Gox in March 2011. McCaleb needed a new project in the cryptocurrency space; once Opencoin had been created, McCaleb and Larsen subsequently both had XRP due to them founding the project.
Ripple has a pre-mined supply of 100 billion XRP. Larsen has 5.19 billion XRP / 100 billion XRP, and currently owns a 17% stake in Ripple. Larsen stepped down from his role of CEO in November 2016 to allow Brad Garlinghouse to step up as CEO. He remains on the board of directors at Ripple.
McCaleb left Ripple in 2013, and has since founded Stellar. McCaleb currently owns a substantial 4.7 billion XRP; at the current price, this represents around 987 million USD worth of XRP.
Why did Jed McCaleb leave Ripple?
The primary reason for McCaleb leaving Ripple is due to his ideas not being implemented by Ripple’s Board of Directors. McCaleb had a very different view for the path of XRP to Chris Larsen. A significant idea McCaleb had was for Ripple to do a Facebook giveaway for XRP; however, this idea was rejected by Ripple’s Board of Directors. So, one of the first things McCaleb implemented when he founded Stellar, was a Facebook giveaway. By McCaleb leaving and creating his own cryptocurrency, he was now free to do what he wanted. The Facebook giveaway did, however, cause problems down the line for Stellar with a dangerous phishing scam on Facebook in early 2018.
How is this relevant to today?
When McCaleb left Ripple, he originally stated that he would sell all his coins within a two week period. This subsequently caused the coin to drop 40% in value. After Ripple’s lawyers got in contact, McCaleb agreed to the following terms:
- McCaleb could not sell more than $20,000 worth of XRP per week in the second, third and fourth years
- 750 million XRP per year could be sold in years five and six
- One billion XRP to be sold in year seven
- Two billion XRP to be sold per year after year seven. The contract has been upheld since its creation.
This is significant because McCaleb has sold off 1 billion XRP between 2014 and 2019 – equating to 1% of the total supply. While McCaleb sold 54 million XRP in April 2020, equating to just over $10,000,000 USD at current prices.
Although McCaleb owns a significant amount of XRP, his selling should not heavily impact the price of XRP. This is unless he breaches his contract, which would be highly unlikely as he would fall subject to a lawsuit against him, and would also negatively impact Stellar. The split of McCaleb and Ripple was messy, although it has been settled. It has bought around a new cryptocurrency (XLM) which has a different vision to Ripple. Ripple is more focused towards getting banks on board, with the aim to appeal towards the institutions. Whereas, Stellar has its aim towards the individuals which are unbanked, offering individuals an alternative to companies such as M-Pesa. The spat in the long-term has overall been positive for the cryptocurrency space.