Blockchain developers face off over US$1b in digital cash
WILMINGTON (DeLAWARe): Two of the world’s largest blockchain developers are battling over more than US$1bil in virtual-currency options, in a dispute that may help establish the leading player in providing new payment technologies to financial companies.
R3, a blockchain startup that leads a group of more than 100 firms, sued rival Ripple Labs Inc. in state court in Delaware Friday, accusing it of reneging on an options agreement for Ripple’s XRP digital currency that is now worth more than US$1bil. Ripple filed its own suit in California accusing R3 officials of duping them on other agreements.
The suits are a sign of a break between R3 and Ripple, which used to partner on developing digital-ledger technology, or blockchain, for financial institutions but are increasingly competing for customers. That technology allows digital information to be distributed securely, and prevents double booking, a critical requirement for virtual currency.
Winning access to digital assets worth more than US$1bil could give New Yorkbased R3 a funding boost and a leg up in the competition with San Francisco-based Ripple and other rivals.
“R3 does not discuss the details of pending litigation,’’ Charley Cooper, managing director, said in a emailed statement. “We are confident in our position and hope for a speedy resolution of this matter.’’
Monica Long, Ripple’s vice president of marketing, said in an emailed statement that its filing is straightforward: “R3 misrepresented their ability and intent to deliver on their commitments.’’
In the Delaware Chancery Court suit, R3 executives accuse Ripple Chief Executive Officer Brad Garlinghouse of abruptly canceling its options agreement covering 5 bil XRP after the price of cryptocurrencies shot up.
The agreement called for Ripple to sell the XRP at US$0.0085 each, but Garlinghouse balked after the value of the currencies jumped to US$0.2293505 each, or more than US$1bil, according to the suit. The agreement, signed in September 2016, didn’t give Ripple officials “the right to unilaterally terminate’’ the pact, according to R3’s suit.
Digital currencies have been on a tear this year, with a total value of almost US$149bil, according to CoinMarketCap.
The most well-known of those, Bitcoin, has more than quadrupled in value since the beginning of the year, outperforming asset classes such as gold, according to data compiled by Bloomberg. Ripple’s XRP is the fourth-largest cryptocurrency, based on market cap, according to CoinMarketCap.
In Ripple’s suit in state court in San Francisco Friday, the company alleged that its counterparts at R3 misled them about their interest in working with the blockchain developer to commercialize Ripple’s technology. R3 “disappeared as a partner,’’ according to the California suit.
R3 is focused on creating Corda, a version of the distributed-ledger technology that allows for new applications for the blockchain, including those of interest to financial institutions.
Headed by former Nex Group executive David Rutter, R3 is studying how trading of securities, derivatives and loans can be overhauled by using distributed ledger technology.—