Recently, Ripple is a name that should not be unfamiliar to cryptocurrency users as it has been a long-standing name in the cryptocurrency market and is also known as one of the names with the potential to win the SEC lawsuit. Therefore, it raises the question of who the founder(s) of Ripple is/are and what they have contributed to the cryptocurrency market. To gain insight into this matter, 247btc.net provides an informative article below.
Who is Jed McCaleb?
Jed McCaleb, born in the United States in 1975, was a prodigious expert in the field of cryptography during his youth. Prior to delving into the blockchain industry, he was the proprietor of several thriving tech firms in the highly competitive American market. Given his extensive knowledge in both technology and cryptography, it is not surprising that Jed became intrigued by the possibilities of blockchain and its applications in the financial sector.
Jed McCaleb’s career
In order to expound on his career trajectory, it is imperative to bifurcate it into two distinct phases, namely pre- and post-entry into the multibillion-dollar Blockchain industry.
Before coming to cryptocurrency
After leaving UC Berkeley, Jed McCaleb and his colleagues founded eDonkey in 2000, specializing in offering file-sharing services similar to Napster. Jed collaborated with Sam Yagan to create the eDonkey Network (also known as eD2K) to gain a competitive edge for his company. eD2K allows users to share files with each other in the form of P2P, catering to a wide variety of file types and sizes. Its strength lies in eDonkey’s ability to store data without incurring any fees, making it one of the key advantages of P2P where customers directly share data with one another.
By 2004, eD2K had established a dominant market share and surpassed FastTrack to become one of the largest file-sharing networks with nearly 3 million users and over 2 billion shared files. However, things took a turn in 2006 when the Belgian authorities seized servers marking the end of the first decline of eDonkey.
In 2006, when the Recording Industry Association of America (RIAA) filed a lawsuit against MetaMachine, the company responsible for developing and providing the e2DK program, allegations of music copyright infringement were made. After MetaMachine Inc. settled for $30 million, the focus shifted towards eDonkey. Fortunately, the two founders of eDonkey were quick to recognize this and disassociated themselves from the company before the RIAA could pursue legal action.
After being abandoned by its two co-founders, eDonkey gradually lost market share and customers to BitTorrent. This marks the end of eDonkey and heralds a new and prosperous chapter for BitTorrent.
After coming to cryptocurrency
The discussion about Jed McCaleb’s journey of success and notoriety in the cryptocurrency market must begin with the year 2009, when Satoshi Nakamoto introduced Bitcoin to the public. It is reasonable to understand this because Jed, with a strong technological foundation and extensive experience in P2P, was easily exposed to Blockchain and Bitcoin at that time. Jed’s initial footprint in the cryptocurrency market was marked by Mt.Gox, which was an impressive accomplishment.
Jed McCaleb, with his extensive knowledge and experience in the field of technology, comprehends the crucial elements necessary for a trading platform that the market requires. Consequently, he created Mt.Gox (short for Magic: The Gathering Online Exchange). The domain name of Mt.Gox had been under the ownership of Jed for a prolonged period of time. It wasn’t until the demand for a cryptocurrency exchange was substantial that he altered the original source code for the website to function as a complete platform for trading cryptocurrencies.
After just a few months, Mt. Gox had achieved significant success with nearly 80% market share belonging to the exchange. However, Jed unexpectedly sold the exchange, surprising many. Mark Karpelès became the next owner of Mt. Gox. However, due to its loose management, Mt. Gox later became a victim of a major hack, considered one of the largest crypto hacks ever. Approximately 850,000 Bitcoins (valued at around $450 million at the time) were stolen from Mt. Gox, leading to a crisis and eventual bankruptcy of the exchange.
After a period of participating in investment activities and observing the operation of Bitcoin, Jed McCaleb quickly realized the limitations and issues that have been, and will be, affecting this coin. Consequently, he conceived the idea of creating a cryptocurrency that could surpass BTC in terms of functionality and operational efficiency.
OpenCoin Inc. was established with the partnership of Jed McCaleb, Jesse Powell, Arthur Britto, and David Schwartz. However, despite OpenCoin’s experienced team in technology, they lacked the crucial ability to run a business, which is necessary for a company to survive and grow. Consequently, Chris Larsen’s appointment as CEO was essential. Under his guidance, OpenCoin’s operations were on the right track, as envisioned by the founders, and it was not long before the company officially changed its name to Ripple, under the sponsorship of Ripple Labs.
Ripple has been highly regarded by major investment funds in both the cryptocurrency and traditional markets due to its impressive financial results. However, perhaps its greatest achievement is establishing a close relationship with banks, which is a rarity in the industry. This was considered a smart move at the time, but it may have ultimately led to unwarranted trouble for Ripple.
After six years of operation, in 2020, Ripple was accused by the SEC of conducting unauthorized securities activities under the Howey Test (a SEC test used to define what assets belong to securities). Specifically, when XRP completed its $1.4 billion capital raise, SEC filed a lawsuit against Ripple, alleging that XRP is a security and the aforementioned fundraising was not disclosed to the agency. The accusation also specifies that once defined as a security, the aforementioned capital raise not approved by SEC is defined as an unauthorized issuance of securities for fundraising purposes. These actions occurred in a serious and concerning manner, as they violated established regulations and legal requirements.
However, after more than three years of pursuing the case, there was a surprising turn of events as Ripple and XRP, the defendants, received a favorable ruling from the court on July 13, 2023. Nevertheless, only half of the $1.4 billion was determined not to be securities, meaning that $728 million out of the $1.4 billion is still considered securities due to the fact that the stated value of XRP was issued through investment organizations.
During that time, an notable event was the departure of Jed McCaleb from the project, yet he is believed to benefit the most as he consistently receives compensation from the project for his departure. It is estimated that a significant portion of the profits from the $3.09 billion sum is due to Jed’s sell off of his XRP holdings during the SEC’s scrutiny of Ripple.
After taking a period of rest following his departure from Ripple, Jed McCaleb returned with a new project called Stellar (XLM). His aim was to create a network that allows users to send and receive money across borders, completely decentralized as long as the assets are encrypted on the Stellar network. Of course, fast and reliable transactions with low fees are the top priorities in the development of Stellar.
Stellar utilizes the Stellar Consensus Protocol (SCP) to ensure network synchronization while simultaneously acting as a data repository for user data and their associated token interactions. Additionally, all user and network transactional information is updated continuously every 5 seconds.
The historical instances of XRP dumping by Jed McCaleb
As previously mentioned, Jed McCaleb co-founded Ripple but later departed due to disagreements. As a result, he was compensated with a sum equivalent to 9.5 billion XRP upon his departure. As of July 2022, Jed McCaleb has completed the sale of his entire XRP holdings.
This development is regarded as positive news for the market, considering that in the past, we have witnessed multiple instances of Jed liquidating his XRP holdings through on-chain data and Coin price drops. Specifically, since 2016, Jed has earned $175 million from selling 819 million XRP, and in Q4 2018 and Q1 2020, he respectively generated $36 million and $26 million from XRP sales. It is worth noting that during this period, Ripple’s revenue was relatively low compared to the value of Jed’s “dumped” orders.
It is hoped that the information provided by Coin68 has resulted in delivering interesting and informative details to the readers about Jed McCaleb and the projects that he has created. While Jed’s notorious reputation continues to exist outside, we cannot deny his contributions to the cryptocurrency market since its inception.
The above information was researched by the team at 247btc.net. We hope that this information will be helpful to our readers. However, please note that this is not investment advice, but rather an informational channel. Therefore, investment decisions should be carefully considered.
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