$3 bln. Legal Battle Between Ripple & R3 To Be Fought In New York
R3 Holdco, an enterprise software firm, which created Corda, a distributed ledger platform, and Ripple Labs, the creator of blockchain based real-time gross settlement system, sued each other in September 2017 over an options contract to purchase Ripple’s digital currency XRP. The lawsuits which were filed in Delaware and San Francisco were dismissed. The fate of the two parties will be decided by the New York court.
In September 2016, R3 and Ripple entered into an agreement, which gave the former the right to purchase up to 5 billion XRPs for $0.0085 per token until September 2019.
At the time of inking the deal, the total value of the options contract was only a few million dollars. Based on the current rate, the value of the contract is now over $3 billion.
In June 2017, Brad Garlinghouse, Ripple’s CEO, sent an email to R3’s CEO David Rutter, saying the options contract is terminated. R3 filed a case in Delaware court alleging the contract does not give Ripple the right to terminate the options unilaterally and requested the judiciary to declare that it is still entitled to all rights, including purchasing the XRP anytime over the next two years.
Ripple retaliated by filing its own lawsuit against R3 in a California state court in San Francisco. In its lawsuit, Ripple alleged that R3 failed to give access to the latters networks of banks and financial institutions. Therefore, Ripple claimed that it had cancelled the options for non-performance on the part of R3. Ripple requested the court to declare the partnership agreements are invalid and order R3 to compensate for the damages in an amount to be determined at trial.
San Francisco state appeals court, however, dismissed Ripple’s petition to appeal the order that dismissed its lawsuit against R3. The Delaware court had dismissed the case filed by R3 in October. San Francisco court pointed out that it simply followed a verbal ruling made by a Delaware judge to dismiss R3’s own case in October.
Therefore, the judgement of New York court will decide the outcome of this legal battle between the companies. Ripple, however, expressed displeasure as New York is the home town of R3. Ripple believes that it would cause “irreparable injury” to the company.
R3 was established in 2015 with the backing of nine of the world’s largest investment banks. Presently, the R3 consortium is made up of over 100 banks, financial institutions, regulators, trade associations, professional services firms and technology companies to develop Corda, the distributed ledger platform designed specifically for financial services. R3’s work is further supported by over 2,000 technology, financial, and legal experts drawn from our global member base.
Corda is the outcome of over two years of intense research and development by R3 and our members and meets the highest standards of the banking industry, yet is applicable to any commercial scenario. With Corda, participants can transact without the need for central authorities, creating a world of frictionless commerce.
Ripple is the creator and a developer of the Ripple payment protocol and exchange network. Originally named Opencoin and renamed Ripple Labs in 2015, the company was founded in 2012 and is based in San Francisco, California. With offices in San Francisco, New York, London, Sydney, India, Singapore and Luxembourg, Ripple has more than 100 customers around the world.
The company offers three products: xCurrent, xRapid, and xVia. Ripple has entered into a wave of partnerships in the part two months. This includes partnership with MercuryFX, IDT Corp., MoneyGram, WesternUnion, the UAE exchange, Central bank of Saudi Arabia, Santander, IndusInd, Cambridge, etc.
Ripple also intends to invest in startups and technology companies, which will agree to use Ripple token (XRP) in their ecosystem.
Garlinghouse, on the sidelines of Money2020 in Singapore, said:
“We, Ripple, will stay focused on solving that institutional use case, but we would certainly partner with companies that are looking to use XRP in lots of different ways.”
Earlier in January 2018, Ripple led a $25 million investment in a start-up company Omni, which offers storage and rental services for goods. In return, Omni agreed to introduce XRP within its ecosystem. More ventures of similar nature are expected to be rolled out soon.