Jan 4, 2018
Meet The Crypto Billionaires Getting Rich From Ripple's XRP
The value of cryptocurrencies skyrocketed in 2017 to more than $600 billion, minting scores of crypto millionaires.
A few lucky holders are also breathing the rarefied air of the billionaires club — and not just in the most valuable cryptocurrency Bitcoin, which has a market capitalization of $237 billion.
Two billionaires who now easily rank among the wealthiest Americans include the current and former CEOs of Ripple, a San Francisco-based company using blockchain technology in international financial transactions. It issues a token called XRP that, as of Monday, January 1, had a market capitalization of $88.9 billion; each XRP was trading at $2.39, according to Coinmarketcap. Just the week before, Ripple had surpassed Ethereum to become the second-most-valuable crypto asset.
Cofounder and former CEO Chris Larsen, who stepped down in November 2016 and now serves as executive chairman of Ripple, has 5.19 billion XRP in his personal holdings and a 17% stake in the company, according to sources at Ripple. That gives him a net worth of $37.3 billion, using Monday's exchange rate.
That would make him the 15th richest American on the 2017 Forbes 400 list as of Monday, tying him with Steve Ballmer, the former Microsoft CEO and current owner of the NBA's Los Angeles Clippers. He ranks a bit ahead of Abigail Johnson, the CEO of Fidelity, who is herself a big cryptocurrency fan, plus hedge funder Ray Dalio and investor Carl Icahn, both of whom have made headlines for calling Bitcoin a bubble.
Current Ripple CEO Brad Garlinghouse owns a 6.3% stake in Ripple, according to a source at the company, and owns additional XRP tokens. He has a net worth of at least $9.5 billion. That would land him at around 54 on the list, with the addition of Larsen, just two slots below Charles Schwab.
XRP skyrocketed in 2017 from $0.006 on January 1 to $2.30 on December 31 — a return of 38,000%.
A third person who's gotten rich on XRP is Ripple cofounder Jed McCaleb, who left the company in 2013 and later came to an agreement with Ripple over the XRP he owns. McCaleb said he donated 2 billion XRP to a donor-advised fund. The remaining 5.3 billion XRP as of February 2016 are in a custody account at Ripple and are meted out to him on a monthly basis. Since the agreement was reached, he has been allowed to sell less than 1% of average daily volume on one exchange that now itself accounts for only 1%-2% of all XRP trading volume. If McCaleb had access to all of the XRP at once, he would be a billionaire.
(Additionally, McCaleb, who founded Mt. Gox in 2010, says he has no Bitcoins left, having sold them to found Ripple. Since leaving Ripple, he has since gone on to found Stellar, but his one billion Lumens, each valued at 48 cents, do not make him a billionaire and won't vest for a couple years.)
Ripple says it has more than 100 customers, such as American Express and Santander, who are collaborating on U.S-to-U.K. payments using Ripple technology.
XRP, being issued by a company, is less decentralized than many other cryptocurrencies. For instance, Ripple itself holds 61.3 billion XRP, including 55 billion that it keeps in escrow. Only 38.7 billion XRP tokens have been distributed.
In contrast, Bitcoin is much less concentrated, though many early holders have a large number of coins. Satoshi Nakamoto, the mysterious creator of Bitcoin, is believed to own the largest amount, with estimated holdings of 980,000 Bitcoins ($13.4 billion by Monday's Bitcoin price). That represents only 5.8% of all Bitcoins currently in existence.
One thing is very clear: the huge swings in the value of Ripple, Bitcoin and other cryptocurrencies mean that there is no guarantee that any of these folks will still be billionaires when Forbes publishes its next list in March.
by Laura Shin