Complaint: Ripple Labs, Inc. (“Ripple”), Bradley Garlinghouse (“Garlinghouse”), and Christian A. Larsen

B. 
Defendants Established an XRP Escrow 
196. XRP investors became concerned that Ripple’s sales could cause XRP’s price to 
crash. As Garlinghouse explained in an internal email on May 16, 2017, XRP investors were 
concerned that Ripple could “sell its [then] 61.68[ ]B[illion] XRP in the market at any time.” 
197. If Ripple had filed a registration statement and quarterly and annual reports—as it 
would have been required to do—Ripple’s sales would have been publicly disclosed. They were not.
198. To assuage investor concerns, on May 16, 2017, Ripple announced that it would 
place 55 billion XRP (most of its current holdings) into a cryptographically-secured escrow that 
would restrict Ripple to accessing only one billion XRP every month (the “XRP Escrow”). 
199. Both Larsen and Garlinghouse were instrumental to the formation of the XRP 
Escrow by developing and, ultimately, approving the idea. 
200. An internal Ripple memo prepared by Ripple Agent-3 around April or May 2017 (the 
“Proposal to Escrow Ripple’s XRP”) explained that one purpose of the escrow was to “secur[e] 
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speculative liquidity” in XRP and to “drive a material increase in XRP trading volume/liquidity” by 
removing uncertainty about when Ripple might dispose of its XRP holdings. 
201. The Proposal to Escrow Ripple’s XRP noted that Ripple wanted “more XRP 
liquidity and [that its] efforts are helping, [but] things are not moving as fast as [Ripple] want[s].”
202. The Proposal to Escrow Ripple’s XRP concluded that the XRP Escrow would be 
successful if it resulted in “immediate increase in volume and price appreciation” for XRP as one of 
the “[r]ewards” to counter-balance the increased “[r]isk” of “Cash flow shortfall” for Ripple. 
203. Ripple and Garlinghouse publicly touted the formation of the XRP Escrow as proof 
that Ripple and XRP holders shared a common interest in the success of Ripple’s efforts as to XRP 
and as one of Ripple’s many efforts to manage the trading market for XRP.
204. In other words, by announcing the XRP Escrow, Defendants sought to encourage 
investors to buy and sell XRP without fear that Ripple could cause XRP’s price to crash—as though 
the XRP market was a functional market subject to ordinary supply and demand independent of the 
issuer. In doing so, Defendants reminded investors of a fact they already knew—that Ripple was 
committed to undertaking efforts to increase XRP trading volume while supporting XRP’s price.