Ripple Labs, Inc. is an American technology company which develops the Ripple payment protocol and exchange network. Originally named Opencoin and renamed Ripple Labs in 2015, the company was founded in 2012 and is based in San Francisco, California.^[1]

Ryan Fugger conceived Ripple in 2004 after working on a local exchange trading system in Vancouver. The intent was to create a monetary system that was decentralized and could effectively empower individuals and communities to create their own money. Fugger later built the first iteration of this system, RipplePay.com. Concurrently, in May 2011, Jed McCaleb began developing a digital currency system in which transactions were verified by consensus among members of the network, rather than by the mining process used by Bitcoin. In August 2012, Jed McCaleb hired Chris Larsen and they approached Ryan Fugger with their digital currency idea. After discussions with McCaleb and long-standing members of the Ripple community, Fugger handed over the reins. In September 2012, Chris Larsen and Jed McCaleb co-founded the corporation OpenCoin.^[3]

OpenCoin began development of the ripple protocol (RTXP) and the Ripple payment and exchange network. On April 11, 2013, OpenCoin announced it had closed an angel round of funding with several venture capital firms. That same month, OpenCoin acquired SimpleHoney to help it popularize virtual currencies and make them easier for average users.^[4] On May 14, 2013, OpenCoin announced that it had closed a second round of angel funding. In July 2013, Jed McCaleb separated from active employment with Ripple.

On September 26, 2013, OpenCoin officially changed its name to Ripple Labs, Inc.^[1] Their CTO, Stefan Thomas, further announced that the source code for the peer-to-peer node behind the Ripple payment network was officially open source.

On May 5, 2015, Ripple received a US$700,000 (equivalent to $739,899 in 2018) civil money penalty from U.S.

Treasury's Financial Crimes Enforcement Network (FinCEN) for “willful violation of the Bank Secrecy Act by acting as a money services business without registering with FinCEN.”^[5] On October 6, 2015, the company was rebranded from Ripple Labs to Ripple.^[6]

On June 13, 2016, Ripple obtained a virtual currency license from the New York State Department of Financial Services, making it the fourth company with a BitLicense.^[7]

In April 2017, Ripple announced that multi-billion dollar banks including the $60 bln Spanish banking giant BBVA joined the Ripple network to solve speed, scalability and cost of global transactions.

In September 2017, R3 sued Ripple for specific performance of an option agreement in which Ripple agreed to sell up to five billion XRPs for a price of $.0085. Ripple countersued, claiming that R3 reneged on a number of contractual promises, and was simply acting in a spirit of opportunism, after the cryptocurrency increased in value more than 30 times. In September 2018, Ripple and R3 reached an undisclosed settlement agreement.^[8]

In March 2018, a Japanese bank consortium led by SBI Ripple Asia, comprising 61 banks launched "MoneyTap", a Ripple-powered mobile app to provide on-demand domestic payments in Japan.^[9] In May 2018, Spanish Banking group Santander released One Pay FX — the first mobile application for international payments powered by blockchain technology, that uses Ripple's xCurrent technology.^[10] Following the creation of a Mumbai office, Ripple has been adding multiple Indian customers in 2018, including leading banks such as Kotak Mahindra Bank, Axis Bank, and IndusInd, that announced that they started using Ripple's products.^[11]

The primary source of funding Ripple has been sales of the XRP cryptocurrency.

According to its own records it sold $1,140.92 million worth of XRP between Q4 2016 and Q2 2019, to a mix of institutional investors and retail investors via sales on exchanges.

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Ripple is a privately funded company.

It has closed five rounds of funding, which included two rounds of angel funding, one round of seed funding, one Series A round and one Series B round.^[4]

Ripple's revenue sources include professional services provided to financial network operators being integrated with Ripple, software built to integrate legacy financial systems with Ripple and the native currency (XRP). Ripple (a private company registered in Delaware) chooses not to reveal information to the public about sales revenues from software and professional services.

Of the XRP 80 billion that Ripple Labs was gifted, Ripple follows a distribution strategy that encompasses payments to business partners such as gateways, market makers and charitable organizations.^[19]

Ripple Labs began working with the World Community Grid in November 2013. The World Community Grid pools surplus processing power from volunteers’ computers and electronic devices to support humanitarian causes such as fighting AIDS, improving solar energy and defeating cancer. Individuals who join the Ripple Labs team and donate their spare processing power are rewarded with XRP. As of March 18, 2014, Ripple Labs has given away XRP134,528,800 through the World Community Grid at a rate of XRP1,250,000 per day.^[20][21][22]

In 2018, Ripple has done multiple donations.

The company has donated $29 million of its cryptocurrency to USA public schools,^[23] and $4 million to The Ellen DeGeneres Wildlife Fund ^[24]

In March 2014, CrossCoin Ventures launched an accelerator which funds companies that work to advance the Ripple ecosystem. The firm funds accepted startups with up to US$50,000 (equivalent to $52,917 in 2018) in XRP, Ripple's native currency, in exchange for a 3% to 6% stake in diluted common stock. Mentorship and support is provided by CrossCoin and Ripple Labs, Inc.^[25]

Ripple also developed early partnerships with companies such as ZipZap,^[26] with the relationship called a threat to Western Union in the press.^[27]

In cooperation with other industry leaders, Ripple Labs became a co-founding member of the Digital Asset Transfer Authority (DATA) in July 2013.

DATA provides best practices and technical standards, including anti-money laundering compliance guidance for companies that work with digital currency and other emerging payments systems.

The committee works as a liaison among public officials, businesses and consumers and create common rules to protect consumers.

The initiative attempts to create a cohesive voice of Bitcoin community members when interacting with regulators.^[28]

In June 2018, Ripple has committed over $50 million in funding to create the University Blockchain Research Initiative, which aims at support research to:

In May 2018, Ripple has announced "an initiative by Ripple that will invest in, incubate, acquire and provide grants to companies and projects that [...] will use the digital asset XRP and the XRP Ledger, the open-sourced, decentralized technology behind XRP, to solve their customers’ problems.".^[30]

In March 2019, Ripple announced a $100 Million fund for gaming developers which would be overseen by Forte.^[31]

For its creation and development of the ripple protocol (RTXP) and the Ripple payment/exchange network, the magazine MIT Technology Review recognized Ripple Labs as one of 2014s 50 Smartest Companies in its February 2014 issue. The criteria for the recognition revolved around "whether a company had made strides in the past year that will define its field."^[32]

On February 9, 2014, Ripple Labs was named as a finalist for a 2014 PYMNTS Innovator Award in two separate categories: Best New Technology as well as Most Disruptive Company.

The recognition pertains to Ripple Labs work in creating Ripple, an open-source, distributed payment protocol powering a new global value web.^[33]

On January 12, 2016, Ripple was listed by UK-based company Richtopia at No. 8 in the list of 100 Most Influential Blockchain Organisations.^[34][35]

Other Awards:

On May 5, 2015, FinCEN fined Ripple Labs and XRP II US$700,000 for violation of the Bank Secrecy Act,^[5] based on the Financial Crimes Enforcement Network's anti-money laundering (AML) additions to the act in 2013.^[44]. To quote the FinCen announcement

"Ripple Labs willfully violated several requirements of the Bank Secrecy Act (BSA) by acting as a money services business (MSB) and selling its virtual currency, known as XRP, without registering with FinCEN, and by failing to implement and maintain an adequate anti-money laundering (AML) program designed to protect its products from use by money launderers or terrorist financiers."

Ripple Labs agreed to remedial steps to ensure future compliance, which included an agreement to only transact XRP and "Ripple Trade" activity through registered money services businesses (MSB), among other agreements such as enhancing the Ripple Protocol.^[5] It has been argued that the changes made to the protocol did not change the protocol itself, but instead added AML transaction monitoring to the network and improve transaction analysis.^[44] However the FinCen statement clearly indicated that was Ripple itself that was making changes to the protocol as a result of the enforcement action. "Ripple Labs will also undertake certain enhancements to the Ripple Protocol to appropriately monitor all future transactions"

Ripple executives including CTO, David Schwartz have admitted the software sold to banks for payments processing, XCurrent, is not a blockchain or any form of distributed ledger.

Schwartz described it as “bi-directional messaging” that can eventually plug them into distributed ledgers, but xCurrent’s technology itself “is not a distributed ledger,”.

^[45]

In May 2018, Stewart Hosie MP, at a UK parliamentary inquiry into digital currencies, questioned Ryan Zagone of Ripple about the value and nature of the XRP Cryptocurrency. "but the point that was made earlier, Mr Zagone, is that if people buy XRP—a financial asset—from Ripple Labs, it does not entitle them to an ownership stake, there is no right to be converted back into conventional currencies and it does not pay any return.

It also seemingly has no purpose.

Is that simply to avoid XRP looking like a security or an equity, and to avoid the necessary regulation?" ^[46]

Ripple claims to be completely separate from and have no control over the XRP cryptocurrency, in spite of the FinCen press release describing XRP as "its virtual currency, known as XRP".

However Ripple controls the vast majority of the supply of XRP^[47] and according to its own published records earns revenues of over one hundred million dollars per quarter selling XRP.^[18]