Ripple to pay $1 million to former manager and founder in lawsuit

A months-long legal battle involving decentralized ledger technology startup Ripple and its co-founder Jed McCaleb has come to an end.

According to a post on the Ripple forum, which revealed that the settlement would take place on Feb. 11, the dispute dates back to last spring, when digital currency exchange Bitstamp filed a lawsuit seeking nearly 100 million XRP — the payment token for the decentralized Ripple network — worth just over $1 million at the time of the lawsuit.

At the time, Ripple alleged that McCaleb violated a 2014 agreement governing the sale of his XRP holdings, amounting to 9 billion. The startup further alleged that McCaleb, along with his members, circumvented the agreement in order to sell XRP that was beyond the control of the agreement.

McCaleb, in turn, fought a fierce battle in court. The case eventually grew to include the Stellar Development Foundation, the organization that oversees the Stellar network, and a separate company and technology provider, a Ripple fork, that McCaleb launched in July 2014.

Under the new agreement, Ripple has released all claims related to the XRP dispute and will pay Bitstamp’s legal fees during the litigation.

All disputed funds were ultimately returned to Stellar during the trial in the U.S. District Court for the Northern District of California.

As part of the settlement, McCaleb also sold his stake in Ripple and agreed to sell 5.3 billion XRP owned by him and his children. The remaining 2 billion XRP will be donated to an undisclosed charitable fund.

The sales control is related to the daily trading volume of the XRP market. According to Ripple, in the first year, McCaleb will not sell more than 0.5% of the average daily trading volume, including weekends and holidays.

In the second and third years of the agreement, this amount increases to 0.75%, and to 1.0% in the fourth year. After the fourth year, the amount is set at 1.5%.

"The results of this settlement demonstrate that I have fully complied with the terms of my prior agreement," McCaleb wrote in a blog post after the settlement was announced. "Personally, I am pleased to see this conclusion to these unfounded allegations."