- Research from the blockchain monitor, Whale Alert, reveals a potential risk to the price stability of Ripple’s native token (XRP).
- Ripple’s co-founder and former CTO, Jed McCaleb, sold about one billion XRPs in the last 5 years. McCaleb has 4.7 billion XRP and could pour more Ripple tokens into the market.
Blockchain monitor Whale Alert has published the first in a series of articles that will investigate some of the most famous whales in the cryptocurrency ecosystem. In this first report, Whale Alert studies the case of Ripple’s co-founder and former CTO, Jed McCaleb.
Alert for Ripple’s investors
Whale Alert makes a distinction between whales and describes them as natural and artificial. The former got their assets on the market and the latter received their assets for free or for participating in the creation of a blockchain project. For example, the creators of Ethereum, Stellar Lumens and Jeb McCaleb received tokens for their participation in the founding of these projects.
According to Whale Alert’s research, McCaleb has sold more than one billion XRP tokens since 2014 almost exclusively on Bitstamp. In September 2019 McCaleb received an additional 100 million XRP from Ripple. The transfer is part of an agreement that McCaleb has with Ripple that compensates him as a company founder. After studying more than 90,000 transactions, Whale Alert claims to have tracked about 8 billion XRP to different addresses. This represents the total amount of XRP assets McCaleb has had.
The investigation claims that the trillion XRPs that were sold in the last 5 years averaged 0.129 cents on the dollar and amounted to $135 million:
He continues to sell and during January 2020 has sold another 19 million XRP. At present we estimate McCaleb’s remaining assets at 4.7 billion XRP (around 5% of total existing XRP) carrying a current market value of over $1 billion USD (…).
Part of the agreement that compensates him as a Ripple founder limits McCaleb’s selling capacity. Ripple’s co-founder may sell a limited amount of XRP during the first six years of a deal that Whale Alert says will expire sometime in 2020. Thus, McCaleb will be released from the agreement and free to increase sales pressure on XRP.
Will the price of the XRP be affected?
The investigation is unable to conclude definitively whether McCaleb has any influence on the price of XRP. However, it states that compared to the total volume of trade per day, its influence appears to be insignificant. Whale Alert states:
(…) from the 1st to the 7th of June 2017, he sold a total of 2.5 million XRP for $741,000 USD. The total trade volume that week for the XRP/USD pair on Bitstamp alone was 127 million XRP, but volume is not a good indicator for how much the market can absorb.
According to the data obtained by Whale Alert, they can only claim that McCaleb sells exclusively XRP. This increases the supply available on the market. Furthermore, the investigation managed to determine that McCaleb uses Bitstamp as a means to collect its sales and did not find evidence that the co-founder of Ripple is reinvesting in another cryptocurrency.
As part of its financing, Ripple has the power to sell a portion of its supply in XRP. These scheduled sales have seen criticism from Ripple’s native token holders. However, the company has assured that its influence on the price of XRP is very low and that her will not sell all of its assets in a short period of time.
A company report supports this claim. Data from Whale Alert shows that in early February of this year, the company moved 100,000,000 XRP from its escrow account to the Ripple portfolio in preparation for scheduled sales. In previous days the company sold a total of 50 million XRP, according to Whale Alert.