Ripple Labs is a San Francisco-based fintech company founded in 2012 by Chris Larsen and Jed McCaleb (who later founded Stellar), building payment infrastructure for cross-border transactions using the XRP Ledger (XRPL) and its native asset XRP. Ripple’s CEO since 2015 has been Brad Garlinghouse. While Ripple maintains genuine partnerships with banks and payment companies (Standard Chartered, SBI Holdings, American Express at various points), the company became most prominent in the crypto industry for its five-year legal battle with the U.S. SEC, which concluded in a landmark partial ruling in 2023 that XRP sales to retail investors on exchanges were not securities — while programmatic sales to institutional investors required further analysis.
Background
XRP and the Ripple consensus protocol (later the XRP Ledger) were created by Jed McCaleb and Arthur Britto. McCaleb left in 2013 (going on to found Stellar, an XRP fork) and Ripple’s distributed ~100 billion XRP — with Ripple Labs retaining a large allocation in escrow. This concentrated holding became central to the SEC’s securities argument.
XRP Ledger and RippleNet
| Product | Description |
|---|---|
| XRP Ledger (XRPL) | Open-source, decentralized blockchain running XRP; 3–5 second settlement |
| RippleNet | Ripple’s payment network for financial institutions using XRP or traditional messaging |
| On-Demand Liquidity (ODL) | Uses XRP as a bridge currency for real-time cross-border settlement without pre-funded nostro accounts |
| XRP EVM Sidechain | EVM-compatible sidechain for smart contract functionality on the XRP ecosystem |
The SEC Lawsuit (2020–2023)
| Date | Event |
|---|---|
| Dec 22, 2020 | SEC files suit alleging Ripple and executives raised $1.38B in unregistered securities via XRP sales |
| July 13, 2023 | Judge Analisa Torres rules: programmatic sales of XRP on exchanges were NOT securities; sales to institutional investors (like Ripple’s direct deals) WERE securities |
| August 2024 | SEC appeals; Ripple cross-appeals on the institutional sales ruling |
| 2025 | Case partially settled; Ripple agrees to pay reduced penalty |
The 2023 partial ruling was celebrated as a major precedent establishing that secondary market sales of tokens to retail investors may not automatically constitute securities transactions — a distinction with implications across the U.S. crypto industry.
Jed McCaleb Distribution
After departing Ripple, Jed McCaleb was entitled to gradually sell his XRP holdings. His sales were governed by a liquidation agreement that became known as the “McCaleb wallet” — tracked closely by XRP market observers.
Related Terms
Sources
- Ripple Labs Website — products and payment documentation.
- SEC v. Ripple Labs — complaint and ruling documents.