Two of the world\u2019s largest blockchain developers are battling over more than $1 billion in virtual-currency options, in a dispute that may help establish the leading player in providing new payment technologies to financial companies.<\/p>\n
R3, a blockchain startup that leads a group of more than 100 firms, sued rival Ripple Labs in state court in Delaware Friday, accusing it of reneging on an options agreement for Ripple\u2019s XRP digital currency that is now worth more than $1 billion.<\/p>\n
Ripple filed its own suit in California accusing R3 officials of duping them on other agreements.<\/p>\n
The suits are a sign of a break between R3 and Ripple, which used to partner on developing digital-ledger technology, or blockchain, for financial institutions but are increasingly competing for customers.<\/p>\n
That technology allows digital information to be distributed securely, and prevents double booking, a critical requirement for virtual currency.<\/p>\n
Winning access to digital assets worth more than $1 billion could give New York-based R3 a funding boost and a leg up in the competition with San Francisco-based Ripple and other rivals.<\/p>\n
\u201cR3 does not discuss the details of pending litigation,\u2019\u2019 Charley Cooper, managing director, said in a emailed statement. \u201cWe are confident in our position and hope for a speedy resolution of this matter.\u2019\u2019<\/p>\n
Monica Long, Ripple\u2019s vice president of marketing, said in an emailed statement\u00a0that its filing is straightforward: \u201cR3 misrepresented their ability and intent to deliver on their commitments.\u2019\u2019<\/p>\n
Bitcoin Surge<\/strong><\/p>\n In the Delaware Chancery Court suit, R3 executives accuse Ripple chief executive officer\u00a0 Brad Garlinghouse of abruptly canceling its options agreement covering 5 billion XRP after the price of cryptocurrencies shot up.<\/p>\n The agreement called for Ripple to sell the XRP at $0.0085 each, but Garlinghouse balked after the value of the currencies jumped to $0.2293505 each, or more than $1 billion, according to the suit.<\/p>\n The agreement, signed in September 2016, didn\u2019t give Ripple officials \u201cthe right to unilaterally terminate\u2019\u2019 the pact, according to R3\u2019s suit.<\/p>\n Digital currencies have been on a tear this year, with a total value of almost $149 billion, according to CoinMarketCap.<\/p>\n The most well-known of those, Bitcoin, has more than quadrupled in value since the beginning of the year, outperforming asset classes such as gold, according to data compiled by Bloomberg.<\/p>\n Ripple\u2019s XRP is the fourth-largest cryptocurrency, based on market cap, according to CoinMarketCap.<\/p>\n In Ripple\u2019s suit in state court in San Francisco Friday, the company alleged that its counterparts at R3 misled them about their interest in working with the blockchain developer to commercialize Ripple\u2019s technology. R3 \u201cdisappeared as a partner,\u2019\u2019 according to the California suit.<\/p>\n Ledger Tech<\/strong><\/p>\n R3 is focused on creating Corda, a version of the distributed-ledger technology that allows for new applications for the blockchain, including those of interest to financial institutions.<\/p>\n Headed by former Nex Group executive David Rutter, R3 is studying how trading of securities, derivatives and loans can be overhauled by using distributed ledger technology.<\/p>\n Ripple, which aims to make it easier to send payments around the world, created XRP, a virtual currency used on its network.<\/p>\n Banks can use Ripple\u2019s network to send customer money from Paris to Tokyo, for example, in a matter of minutes rather than days.<\/p>\n The transaction fees are also much lower compared with traditional money transfer companies.<\/p>\n Ripple enables this by having a middleman convert euros to XRP in Paris and sending the XRP to Tokyo, where it is then converted to yen by another middleman.<\/p>\n Last year, 12 R3 member banks tested Ripple\u2019s technology. R3 alleges that its work with Ripple was at least in part responsible for boosting the value of Ripple\u2019s XRP digital currency.<\/p>\n Still, since then, R3 has faced some defections, with some banks leaving the consortium. Ripple has signed deals with more than 90 customers globally and has over 75 customers in various stages of deploying its technology for commercial use.<\/p>\n The Delaware case is R3HoldCo v. Ripple Labs, CA 2017-0652, Delaware Chancery Court (Wilmington).<\/p>\n The California case is Ripple Labs v. R3 LRC LLC, 15-561205, California Superior Court (San Francisco).<\/p>\n
\n