"Significant discrepancies" would have been noted in Ripple's XRP release schedule

Coin Metrics, a cryptocurrency financial data provider that compiles hard-to-acquire data for large blockchain platforms, has discovered several major inconsistencies in its recent assessment of XRP's secure procurement and warehousing schedule. .

As stated in an official report published on May 16, 2019 on the Coin Metrics website, the data provider found that two quarterly market reports, published by US fintech Ripple Labs, the developer of XRP, had incorrectly stated the number of XRP from rogue.

Coin Metrics' investigation revealed that Ripple "under-reported" the XRP released from the escrow sequester of "200 million XRP in total", an amount estimated at approximately $ 84 million at current prices.

1. Two quarterly market reports under-reported the number of XRP released escrow for a total of $ 200 million XRP ($ 84 million at current prices)

– CoinMetrics.io (@coinmetrics) May 16, 2019

"A faster future release of escrow funds"

Other irregularities identified by Coin Metrics researchers showed that the "escrow line" had been implemented in a manner significantly different from that announced by Ripple Labs management. According to the firm, the actual queue used "led to a faster future release of blocked funds" than what the announced schedule seemed to suggest.

In addition, the Coin Metrics team learned that other parties, who may have been associated with the San Francisco-based Ripple Labs management, could have removed about 55 million XRP from an "unknown escrow address" . This address could not have been directly "connected to the main Ripple escrow account".

The Coin Metrics report pointed out that at the end of March 2017, the management of Ripple Labs said:

Escrow allows XRP Ledger and ILP [Interledger Protocol] communicate with XRP secure for a period of time or until certain conditions are met. This can be used to keep funds until a service is completed or until a time such as a birthday.

Can investors "mathematically verify" the XRP introduced on the markets?

On May 16, 2017, his CEO, Brad Garlinghouse, posted on Ripple's website an article on his blog that stated that the American company fintech was "committed to placing 55 billion XRP" on his escrow account by the end of the year. (2017).

This, explained Ripple's post, would aim to "permanently remove any uncertainty" about the amount of funds held by Ripple Labs. The blog further mentioned that by securing the majority of XRP tokens, investors would be able to "mathematically check" the total XRP offer entering the market.

He further stated that everything that XRP was not used on a total of $ 1 billion unlocked each month would be turned over to the escrow party.

As noted by Ripple Labs:

We will use Escrow to issue 55 XRP one billion contracts each, which expire on the first day of each month, from month 0 to month 54. […] We will then return anything that is not used at the end of each month to the back of the escrow line. For example, if 500 million XRP remain unspent at the end of the first month, that 500 million XRP will be placed in a new escrow account that expires in month 55.

25 contracts of 1 billion XRP, not "55 contracts of 1 billion XRP" as announced

This meant that Ripple could not "sell more than a billion XRP" each month for "at least four and a half years," explained the Coin Metrics blog.

The chain data (extracted from the XRP registry) indicates that XRP 55 billion was placed in escrow on December 16, 2016, Coin Metrics said. The Coin Metrics research team found that although Ripple's announcement stated that "55 XRP one billion contracts" would be blocked, there were actually 25 XRP one billion contracts.

These contracts were due to expire each month "from January 2018 to January 2020 and 60 other contracts of 500 million XRP each, including two expiring at the beginning of each month from February 2020 to July 2022," reveals the report "Coin Metrics".

Number of "incorrect reports" placed in a blocked account

When Coin Metrics released its report, 17 escrow contracts were bought and 43 others were issued. In total, there were 17 billion XRP withdrawn from the third escrow and 13.2 billion XRP reintegrated into escrow accounts, totaling 3.8 billion XRP.

According to the company's research, based on the analysis of two reports, Q3 2018 and Q1 2019, the management of Ripple Labs has "misstated" the number of XRP it has placed in its secure deposit system. Data from the third quarter of 2018 and the first quarter of 2019 reports show that the XRP transferred to escrow was "over-reported" by 100 million XRP. This actually "under-reported" the total of XRP published, according to the Coin Metrics report.

Chain data shows that the announced broadcast schedule is not consistent

One of the hypotheses put forth by Coin Metrics researchers is that "any unlocked but unused XRP at the end of the month would end up being sequestrated up to the month n + 55 – in other words, the unused XRP would would place on the back of the queue. " The cryptographic data provider said that he had taken this assumption after reviewing the documentation of the Ripple escrow system, according to which the company fintech "would return all that was not used at the end of each month at the end of the escrow queue ".

The Coin Metrics team claims that the string data obtained from the XRP book suggests the opposite. Instead of blocking unused funds in the first slot (ie the first month) without commitment, they were locked in order to maintain a fixed amount of 1 billion XRP per escrow. "

The Coin Metrics report further stated that on January 6, 2018, the "beginning of month 0", Ripple released the "XRP's first $ 1 billion pledge" and "blocked XRP 900 million for the month of December." , as expected "towards the end. from January 2018.

XRP publishing calendar significantly "accelerated"

In February 2018, which would be "the first month" according to Ripple's publication schedule, the American firm Fintech "has unlocked 1 billion XRP and used 100 million." Notably, Coin Metrics found that "instead of locking in an additional 900 million XRP in month 56 (September 2022), the first month in which no escrow was to be released, the remaining $ 900 million was underwritten in two different contracts. "

According to the latter, one of these contracts was for 100 million XRP and was to expire "the 55th month, which would change the XRP for that month to 1 billion XRP and another 800 million XRP expiring at 56th month ".

As noted in the Coin Metrics report, month 55 was "previously designated" as a period during which "an escrow would be released". One of the conclusions drawn by the Coin Metrics team from this type of XRP Token Publication is:

[Ripple’s] amended [XRP release] This scheme accelerated the XRP release schedule, compared to the strict escrow scheme as understood by most media and analysts at the time of reporting and illustrated in Ripple's examples of how it works.