Ripple Labs has reached an agreement that will prevent original co-founder Jed McCaleb from selling 9bn XRP – the portion of the protocol’s native currency he was awarded for starting the company – this year.
The open-source payment network provider issued the announcement in a blog post penned by director of communications Monica Long. The post said that McCaleb, who recently launched his new project Stellar, had agreed to a distribution timeline that will block him from selling more than a specific amount of XRP each year over the next seven years.
Under the terms of the plan, McCaleb cannot sell more than $10,000 worth of XRP per week for the first year of the agreement.
Long indicated that the plan will allow McCaleb the freedom to liquidate some of his holdings, while preventing his decision from having a significantly negative impact on the larger XRP market.
She wrote:
“For context, $10,000 per week currently comprises less than 1% of volume, so it’d have a minimal impact to the price of XRP. For the next four weeks, he retains an option to sell up to $2.5m of XRP off market to a single counterparty vetted by Ripple Labs.”
Notably, the price of Ripple fell by 40% on 22nd May, the day McCaleb took to the company’s XRP Talk forum to announce he would move to sell all his XRP holdings over a two-week span.
Terms and conditions
The deal sets firm limitations on the amount of XRP McCaleb can sell over a seven-year period, with the timeline allowing McCaleb more freedom to sell his XRP holdings over time.
The remainder of the schedule prevents McCaleb from selling more than:
- $20,000 per week during the second, third and fourth years
- 750m XRP per year for the fifth and sixth years
- 1bn XRP per year for the seventh year
- 2bn XRP per year after the seventh year.
Following McCaleb’s announcement that he would liquidate his holdings, CEO Chris Larsen agreed to gift 7bn XRP to the Ripple Foundation for Financial Innovation, which was established to help underbanked consumers around the world.
Putting the past to rest
Ripple Labs’ original founders retained 20bn XRP as compensation for the risks associated with starting the company in what has long proved to be one of the company’s more controversial decisions. Eighty billion XRP was then given to Ripple Labs to facilitate its operations.
The post indicated that Ripple co-founder and chief strategist Arthur Britto had previously signed a similar agreement limiting the rate at which he could liquidate his XRP holdings.
Long ended the post by acknowledging past disagreements between Larsen and McCaleb. Further, she remarked that the deal illustrates how the co-founders have been able to put aside serious differences to ensure Ripple will be able to complete its stated goal of revolutionizing finance.
Long concluded:
“Our team at Ripple Labs, our partners, investors and I’m sure you, our community, are pleased to have reached a final, constructive outcome as we continue on with the important work we care about and believe in so deeply.”
Document signing image via Shutterstock