Ripple Did Not Conduct an ICO With XRP Nor Does it Control UNLs on XRPL

Ripple had previously dispelled these claims, but they recently resurfaced amid the ongoing legal battle to ascertain if XRP is a security or not.

Eri, a prominent media personality and member of the XRP community, has come up to debunk published claims that Ripple conducted an ICO with XRP. Eri’s remarks came as a response to a report from Protos. The media company’s claim that Ripple controls most UNLs on the XRP Ledger was also debunked.

Notably, the Protos article alleges that Ripple conducted one of the world’s earliest Initial Coin Offerings (ICOs). This is the same claim with which the US SEC charged Ripple and its executives in December 2020. Echoing Ripple’s earlier response, Eri clarified that the company never carried out an ICO.

Can’t wait for the new content creators to start fighting FUD.
Hello @Protos & @AilsaSherr . Ripple never did an ICO. ETH didn’t launch for 3 years after XRP was in circulation. Have you looked into % gain of #XRP vs #BTC in the early years? I claim my time back. No, you… pic.twitter.com/Ii1w17DBmx

— 🌸Crypto Eri 220k+ Followers (Beware of Imposters) (@sentosumosaba) May 9, 2023

For context, an ICO is a type of crowdfunding method used by startups and projects to raise funds by issuing a new token. ICOs are similar to initial public offerings (IPOs) in traditional finance, but instead of selling shares in a company, ICOs sell newly-created digital tokens to investors.

Ripple Denied Conducting an ICO with XRP

Although Ripple sells XRP to the public to fund its infrastructure, the firm has vehemently denied that it conducted a “single” offering for the asset in the manner typical of an ICO. Moreover, ICOs usually involve newly-minted tokens, but Ripple’s sale of XRP involves an already-circulating asset tradable on numerous exchanges.

The Protos report mentioned that investors had to purchase XRP with Ethereum (ETH) during the ICO, but Eri highlighted that XRP had been in circulation for up to three years before Ether launched. This confirms that XRP already existed long before the so-called ICO.

“Every other case in which courts have ruled that transactions involving a digital asset were investment contracts involved an issuer’s ICO or other promise of future tokens. Ripple never held an ICO, never offered future tokens to raise money, and has no contracts with the vast majority of XRP holders,” Ripple disclosed in court at the outset of the SEC lawsuit.

In addition, former CFTC chairperson Chris Giancarlo argued in the past that investors who purchased XRP do not rely on Ripple’s efforts for profits – a premise on which the SEC labels assets as investment contracts.

Giancarlo pointed out that XRP is a token on the XRP Ledger which is independent of Ripple. If Ripple were to fold, XRP and the XRP Ledger would continue to function regardless. He highlighted that the network is maintained by autonomous third-party validators with no reliance on Ripple.

UNLs on XRP Ledger

A separate Protos report alleged that Ripple “controls the cooperation rate of UNLs,” insinuating a form of control over the consensus mechanism of the XRP Ledger. This calls to question the decentralized nature of the XRPL. As previously reported by The Crypto Basic, individuals such as Justin Bons also share this sentiment.

Everyone appreciates good investigative journalism @AilsaSherr, but who is the “it” claiming the following at @Ripple?
A double-check is in order for # of UNLs in the sentence:
“It did acknowledge running its own validators, but claims it only operates 10 of them.”@HammerToe… https://t.co/MjzJln27ai

— 🌸Crypto Eri 220k+ Followers (Beware of Imposters) (@sentosumosaba) May 9, 2023

The recent Protos article also elicited responses from the XRP community, who sought to address the claims made. Notably, the XRPL Foundation, which manages the dUNL (now containing 36 validators), is not affiliated with Ripple. Rather, the Foundation is managed by independent individuals within the community.

Community members also called attention to the fact that, while the network recommends UNLs, participants are always free to choose which one they want. David Schwartz, Ripple’s CTO, recently highlighted this.