Late last week, coinciding with Ripple’s rise in price, Jed McCaleb, one of the founding members of the company, reportedly began a sell-off of tokens. Moreover, there were claims that the sell-off was in violation of his lawsuit with Ripple.
This led many to wonder what the lawsuit was, and why McCaleb left the company in its nascent stages to start Stellar. The answer to this lies in the events that occurred when Ripple was known as OpenCoin.
This was when he decided to leave the company, and a settlement was reached in 2016, wherein he had to sell all the shares of the company he held. In return, he will slowly sell off all of the XRP owned by him and his children, as opposed to dumping it all on the market at once.
This includes close to 5.3 billion XRP owned by him. Under the terms of the agreement, an additional 2bn XRP will be donated to a charitable fund.
In the past, Ripple has stated that McCaleb will not be able to sell more than 0.5% of the average daily volume. This number will increase to 0.75% for the second and third year, 1.0% for the fourth year, and 1.5% beyond that.
As for the reason for McCaleb leaving the company, David Schwartz, the current CTO of Ripple, stated:
“Jed had a long string of bad ideas that Ripple’s Board of Directors refused to implement. So Jed started Stellar based on those ideas…[he] tried to dump his XRP quickly and Ripple acted to stop him through a series of lawsuits.”