TL;DR

• Jed McCaleb co-founded Ripple but left in 2013 to start Stellar.
• McCaleb helped create XRP Ledger with a pre-mined supply of 100 billion XRP.
• He left due to disagreements with Ripple’s leadership on XRP’s direction.
• McCaleb received 4.7 billion XRP as part of his departure agreement.
• Legal disputes led to a contract restricting how fast he could sell XRP.
• McCaleb started Stellar to focus on financial inclusion for the unbanked.
• He implemented an XRP-style giveaway on Facebook, which later caused issues.
• His XRP sales are regulated, preventing large dumps from affecting price.
• McCaleb has sold billions of XRP, but his sales are legally controlled.
• His legal disputes with Ripple were settled, and he is not involved in the SEC case.
• Ripple focuses on banks, while Stellar targets individuals in underbanked regions.
• Despite the split, both Ripple and Stellar contribute positively to crypto.

Introduction

XRP is a digital currency created to facilitate fast and low-cost international payments. It operates on the XRP Ledger (XRPL), which was developed by a team including Jed McCaleb, David Schwartz, and Arthur Britto. 

The history of XRP is closely tied to the evolution of Ripple, the company behind its development, and to McCaleb's significant contributions to the cryptocurrency space.

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 (The Ripple Dream Team)

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.

Early development of XRP

The origins of XRP trace back to 2011 when McCaleb and his co-founders aimed to create a more efficient alternative to Bitcoin's mining process. They sought to develop a consensus mechanism that did not rely on resource-intensive mining, leading to the creation of the XRPL. By June 2012, the ledger was launched with a total supply of 100 billion XRP, all pre-mined at its inception.

In 2012, McCaleb acquired the company RipplePay from Ryan Fugger, transforming it into a digital currency network initially named OpenCoin. This name was later changed to Ripple Labs in 2015. The company aimed to enable secure and instant cross-border transactions, positioning XRP as a bridge currency for financial institutions.

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 their 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 as 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 that his ideas were not being implemented by Ripple's Board of Directors. McCaleb had a very different view of 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.

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.

Additionally, McCaleb's vision for Stellar was focused on financial inclusion, aiming to serve the unbanked populations in developing countries. He sought to create a platform that would facilitate low-cost cross-border transactions without the profit-driven motives that characterized Ripple. 

This shift from a for-profit model at Ripple to a non-profit model with Stellar was also motivated by his desire to build a more inclusive financial ecosystem.

Moreover, there were tensions surrounding McCaleb's significant holdings of XRP and his attempts to sell them, which Ripple sought to manage through legal actions. 

This situation contributed to his decision to leave and establish Stellar, where he could pursue his vision without such constraints.

Transition to Stellar

In 2013, McCaleb left Ripple amid concerns about his substantial holdings of XRP (approximately 6.5 billion tokens) and potential market impacts if he were to sell them. 

He co-founded Stellar Development Foundation in 2014 with Joyce Kim, focusing on creating an open-source protocol for cross-border transactions that could include both fiat and digital currencies. 

Stellar adopted some principles from Ripple but ultimately developed its own consensus mechanism known as the Stellar Consensus Protocol.

The impact of Jed McCaleb

Jed McCaleb has played a pivotal role in shaping the landscape of cryptocurrency. Before his work with Ripple, he founded the Mt. Gox exchange, which became one of the first major Bitcoin exchanges before its collapse in 2014. 

His ventures have consistently aimed at improving financial systems through technology. As of 2023, McCaleb is recognized as a billionaire entrepreneur and continues to influence the blockchain space through his projects like Vast, an aerospace startup focused on developing artificial gravity space stations.

What was the outcome of the lawsuits between Ripple and Jed McCaleb

The lawsuits involving Jed McCaleb and Ripple primarily stemmed from McCaleb's significant holdings of XRP after he left the company in 2013. In 2015, Ripple accused him of violating an agreement that restricted how quickly he could sell his XRP. 

This led to a legal dispute that concluded in 2016, resulting in McCaleb agreeing to a sales restriction on his remaining XRP holdings. The terms allowed him to sell XRP at a rate determined by the daily trading volume, which would increase annually, and he also agreed to donate a portion of his holdings to charity.

Despite these legal proceedings, McCaleb's situation is distinct from the ongoing lawsuit between Ripple and the SEC, which alleges that Ripple's sales of XRP constituted unregistered securities offerings. 

The SEC case, initiated in December 2020, has not directly implicated McCaleb, even though he has sold billions of dollars worth of XRP since the lawsuit began. This has raised questions about the SEC's enforcement actions and perceived inconsistencies in how they have treated different parties involved with XRP.

Overall, while McCaleb's legal issues with Ripple were resolved with an agreement on how he could sell his XRP, he has remained uninvolved in the SEC's case against Ripple.

How is this relevant 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:

1. McCaleb could not sell more than $20,000 worth of XRP per week in the second, third and fourth years
2. 750 million XRP per year could be sold in years five and six
3. One billion XRP to be sold in year seven
4. 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.

Conclusion

Although McCaleb owns a significant amount of XRP, his selling should not heavily impact its price. 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 a new cryptocurrency (XLM) that has a different vision than Ripple. 

Ripple is more focused on getting banks on board, with the aim of appealing to institutions. On the other hand, Stellar aims at the unbanked, offering individuals an alternative to companies such as M-Pesa. The spat, in the long term, has been overall positive for the cryptocurrency space.

FAQs

Here are some FAQs related to the history of XRP and Jed McCaleb.

1. Who is Jed McCaleb, and what is his connection to XRP?

Jed McCaleb is a co-founder of Ripple and played a key role in creating the XRP Ledger. He left Ripple in 2013 due to disagreements with its leadership and later founded Stellar, another cryptocurrency project.

2. Why did Jed McCaleb leave Ripple?

McCaleb left Ripple because he had different ideas about how XRP should be used. One of his ideas was to give away XRP on Facebook, but Ripple’s board rejected it. He also wanted to focus on financial inclusion, which led him to create Stellar.

3. How much XRP does Jed McCaleb own, and can he sell it all at once?

McCaleb received 4.7 billion XRP as part of his exit agreement. However, a legal contract restricts how much he can sell at a time. This prevents him from flooding the market and affecting XRP’s price.

4. What is the difference between Ripple and Stellar?

Ripple focuses on working with banks and financial institutions to improve cross-border payments. Stellar, created by McCaleb, aims to help unbanked people access financial services, making transactions cheaper and more inclusive.

5. Is Jed McCaleb involved in Ripple’s legal issues with the SEC?

No, McCaleb is not involved in the SEC lawsuit against Ripple. His legal disputes with Ripple were settled earlier, and he has been selling his XRP under agreed conditions.