Could Ripple's Multi-Billion Dollar XRP Reserves Pose a Risk to Token Holders?

Ripple, the custodial company to the open-source cryptocurrency XRP, owns 60 percent of all XRP ever created; these holdings are valued at $22 billion at current prices.

The majority of XRP is owned by Ripple Inc. Furthermore, the founders of the company and its current executives hold influential amounts of XRP. Because such large amounts of XRP are concentrated in the coffers of Ripple Inc., these holdings could result in unfavorable regulatory treatment and pose a risk to token holders.

Ripple needs to sell XRP from its coffers to expand, disgruntled business partners may decide to cash out, and institutional clients could flood the market after getting a bulk deal on the token.

"In Q4 2017, Ripple locked up 55 billion XRP in a cryptographically-secured escrow account. Ripple created the lockup to create certainty of XRP supply at any given time. Due to that lockup, Ripple has access to only 13 percent of the total XRP in circulation. Ripple's sales were a tiny fraction of that amount."

There is roughly 41 billion circulating XRP. If Ripple has access to 13 percent of these coins then 5.3 billion coins available for immediate use.

"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."

"Ripple Labs plans to retain 25% of all XRP issued to fund operations and distribute the rest to incent the participation of market makers, gateways, and consumers to utilize the protocol. Given that there is a finite number of XRP, [and] as demand for XRP grows, the value of XRP should appreciate. In this manner, Ripple Labs believe that its incentives are aligned with those of protocol's users-both want the protocol to reach its full potential and scale."

"Ripple Labs holds a substantial amount of XRP, which it sells from time to time Through these sales, Ripple Labs is able to monetize these assets to fund its operations, specifically the development and adoption of the protocol. This exposes Ripple Labs to the market risk of XRP's value. Ripple Labs has taken numerous steps to identify, monitor and mitigate sources of market risk. Ripple Labs has established legally-binding agreements with insiders and owners of large amounts of XRP that protect against a large scale sell-off of the asset."

Jed McCaleb is selling more XRP than he is supposed to according to the 2016 agreement he has with Ripple Inc. Jed is the the single largest individual holder of XRP. He can absolutely *decimate* the price if he chooses, and he has motivation in the form of Stellar to do so https://t.

In that vein, it is critical that Ripple maintains a long-term outlook for its XRP holdings if it wants to maintain price growth of XRP. If the company or its employees look to dump XRP for short-term gains, then token holders will be left holding the bag.