Ripple CEO: ‘People Need Education on Ripple’s XRP Control’

  • Ripple CEO Brad Garlinghouse emphasized that the company does not control XRP and called for better public understanding about its structure.
  • A U.S. District Court previously ruled that Ripple conducted unregistered sales of XRP as investment contracts, violating federal securities laws.
  • Questions remain about Ripple’s influence over the XRP Ledger, with past research noting significant oversight by the company.
  • Ripple leaders argue the XRP Ledger operates through a decentralized system, despite past evidence of centralization.
  • The debate over decentralization and Ripple’s actual role in XRP management continues in both the industry and legal circles.

Ripple CEO Brad Garlinghouse stated at the DC Fintech conference this week that he is not the CEO of XRP and that Ripple does not control the digital asset. He made these remarks in response to ongoing public confusion about the company’s relationship with XRP.

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Garlinghouse said, “We need to educate these people,” after noting that some still describe him as the CEO of XRP and think Ripple controls the cryptocurrency. He also highlighted that XRP is an open-source technology, and Ripple uses it in its suite of financial products to support payments and transfers.

A U.S. District Court decision found that Ripple’s institutional sales of XRP were unregistered securities offerings in violation of Section 5 of the Securities Act. As part of a settlement, Garlinghouse agreed not to dispute the court’s ruling, which remains in effect after an appeal. Judge Analisa Torres wrote, “Ripple’s Institutional Sales of XRP constituted the unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act,” in the court’s decision, available here.

Public confusion over Ripple’s control of the XRP Ledger has persisted for years. In 2012, Ripple developers restarted the blockchain several times and lost more than six months of early transaction data. According to David Schwartz, one of XRPL’s creators, “The people who created XRP are pretty much the same as the people who created Ripple,” as cited in SEC filings.

Analysis from Bitmex Research in 2018 found Ripple maintained significant control over XRPL’s operation, as described in their report. Most XRPL nodes depended on Ripple.com for ledger updates, challenging claims of decentralization. Despite updates claiming decentralized governance, experts observed that Ripple and the Ripple-backed XRP Foundation continue to influence XRPL’s default validator list.

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At the DC Fintech event, Garlinghouse argued that changes to the XRP Ledger require 80% community approval, and Ripple does not control that process. He used this point to assert decentralization. However, the Securities and Exchange Commission reported that most XRPL validators rely on a trusted set of servers, often run by entities close to Ripple.

The ongoing debate centers on whether XRPL is decentralized to the degree claimed. In contrast, Bitcoin operates with over 24,000 nodes worldwide, while XRPL uses about 35 default validators, mostly listed via the Ripple-supported XRP Foundation.

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