The price of XRP is on the rise again following the resignation of a key Ripple Labs board member and subsequent charitable commitment by its CEO Chris Larsen.
Late last week, Kraken CEO Jesse Powell resigned from the board of the San Francisco-based payment network provider.
However, the decision also returned attention to a long-contentious issue surrounding the company, the allocation of large portions of Ripple’s native currency – XRP – to founders.
As a result of the decision, Ripple Labs CEO Chris Larsen has committed to donate large portion of the digital currency he owns to a charitable cause.
In doing so, Larsen will also be giving 7 billion XRP back to the network, a move that at press time, seems to be fostering a positive attitude towards Ripple’s market value in the community.
Price trend reverses
Last week, the price of XRP – the unit of account inside of the payment protocol of Ripple, experienced a significant drop. XRP prices fell more than 40% in value following the announcement that Ripple Labs co-founder and former CTO Jed McCaleb planned to sell his 9 billion XRP.
That large number of XRP was provided to McCaleb in the early days of the company when an initial 100 billion XRP was created, though McCaleb – the one-time owner of Mt. Gox – has left for other pursuits. The news of the large sell-off – comprising roughly 10% of the initial XRP – prompted other XRP owners to follow suit.
However, as of this writing, the price of ripple is up more than 20% on its top three markets.
Ripple Labs’ Director of Communications Monica Long posted a statement that Larsen, the CEO, will donate 7 billion XRP to a foundation that will primarily be focused on the underbanked, a move that has perhaps helped boost investor sentiment.
According to Coinmarketcap, XRP is currently ranked sixth among distributed currencies. The total XRP in circulation is valued at more than $35m.
After the abrupt news that McCaleb would sell off his share of XRP, board member Jesse Powell resigned from his position on 24th May. The CEO of the digital exchange Kraken, Powell was an early investor in Ripple Labs.
With McCaleb, Powell helped to set up the company before turning focus back to Kraken, which recently raised $5m in investor funding led by Hummingbird Ventures.
Powell has apparently been unhappy regarding the large allocations of XRP given to Ripple Labs’ founders, writing in his resignation post:
“Unfortunately, unlike the founders, I don’t have swathes of XRP to dump if I don’t think it’s working out.”
Legal fights begin
Ripple Labs, via general counsel George Frost, then sent a cease-and-desist letter to Powell after his resignation. The letter asked Powell to retract the allegedly defamatory statements in his resignation.
“You are using your insider knowledge to sabotage Ripple Labs and wrest large payments for yourself and McCaleb,” Frost declared in the document.
Instead of a retraction, Powell expressed his frustration by annotating the document, which has since surfaced on reddit.
In the full posting, Powell alleges that billions in XRP were given to Ripple Labs’ founders without board approval.
Yet, Powell remained propitiatory in his public reply to Frost’s letter. As an early investor in Ripple Labs, he indicates a desire for its long-term success:
“I certainly have an interest, and I am rooting for the company’s success. I would prefer not to lose my investment.”
Ripple Labs’ early days
The early incarnation of San Francisco-based Ripple Labs began back in 2011, when the startup was called OpenCoin. The project grew out of McCaleb’s idea to build a digital currency that improved on bitcoin, yet catered to a similar community-oriented userbase.
This brought the interest of Powell and current chief cryptographer David Schwartz, among others.
Larsen has been with Ripple Labs since August 2012. He has helped raise VC funding for the company from the likes of Google Ventures, Andreessen Horowitz and Lightspeed Venture Partners.
The company began giving away XRP in spring 2013 to longstanding members of the Bitcoin Talk forum. According to McCaleb’s LinkedIn profile, the former CTO left Ripple Labs in July 2013.
Ripple Labs has lost at least two board members in the past year: McCaleb, and now Powell, though Stanford professor Susan Athey was appointed to the board in April.
Despite recent issues among its top brass, however, Ripple Labs has been able to secure a key partnership with German bank Fidor.
This signaled the company’s shift towards complete focus as a financial payment protocol, or ‘rail’ for institutions. Company executives told CoinDesk earlier this year that was a pivot for the company.
For more on Ripple Labs and its goals in the digital currency marketplace, read our full profile of the company.
Image via Ripple Labs