In a dispute that may help establish the leading player in providing new payment technologies to financial companies, two of the world’s largest blockchain developers are battling over more than $1 billion in virtual-currency options.
Accusations of reneging on an options agreement for Ripple’s XRP digital currency that is now worth more than $1 billion, R3, a blockchain startup that leads a group of more than 100 firms, sued rival Ripple Labs Inc. in state court in Delaware Friday. And accusing R3 officials of duping them on other agreements, Ripple filed its own suit in California.
R3 and Ripple are increasingly competing for customers but they used to partner on developing digital-ledger technology, or blockchain, for financial institutions and the suits are a sign of a break between them. That technology prevents double booking, a critical requirement for virtual currency and allows digital information to be distributed securely.
New York-based R3 would be given a funding boost and a leg up in the competition with San Francisco-based Ripple and other rivals by the winning access to digital assets worth more than $1 billion.
“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.’’
Its filing is straightforward: “R3 misrepresented their ability and intent to deliver on their commitments,’’ said Monica Long, Ripple’s vice president of marketing.
abruptly canceling its options agreement covering 5 billion XRP after the price of cryptocurrencies shot up was the accusation that R3 executives accused Ripple Chief Executive Officer Brad Garlinghouse of in the Delaware Chancery Court suit.
According to the suit, Garlinghouse balked after the value of the currencies jumped to $0.2293505 each, or more than $1 billion, even though the agreement called for Ripple to sell the XRP at $0.0085 each. According to R3’s suit, Ripple officials were not given “the right to unilaterally terminate’’ the pact under the agreement, signed in September 2016.
According to CoinMarketCap, with a total value of almost $149 billion, digital currencies have been on a tear this year. And according to data compiled by Bloomberg, since the beginning of the year, outperforming asset classes such as gold, the most well-known of those, Bitcoin, has more than quadrupled in value. According to CoinMarketCap, based on market cap Ripple’s XRP is the fourth-largest cryptocurrency.
Including those of interest to financial institutions, Corda, a version of the distributed-ledger technology that allows for new applications for the blockchain is what R3 is focused on creating. R3 is studying how trading of securities, derivatives and loans can be overhauled by using distributed ledger technology and is headed by former Nex Group executive David Rutter.
XRP, a virtual currency used on its network was created by Ripple, which aims to make it easier to send payments around the world. For example, in a matter of minutes rather than days, banks can use Ripple’s network to send customer money from Paris to Tokyo.
(Adapted from Bloomberg)