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

FACTS 
I. 
The Creation of XRP 
 
A.
 
Larsen and Co-Founder Established Ripple 
38. 
In approximately late 2011 or early 2012, Co-Founder began working on the idea 
and code for what would become the “XRP Ledger” (a/k/a “Ripple Protocol”). Around that time, 
he recruited Cryptographer-1 and Ripple Agent-1 to assist him in programming the XRP Ledger. 
39. 
The XRP Ledger—software code—operates as a peer-to-peer database, spread 
across a network of computers, that records data respecting transactions, among other things. 
40. 
During the process to achieve consensus with respect to a new proposed state of the 
XRP Ledger, each server on the network evaluates proposed transactions from a subset of servers it 
trusts not to defraud it, also known as the server’s “UNL” or “Unique Node List.” While each 
server defines its own trusted servers, the XRP Ledger requires a high degree of overlap between the 
trusted nodes chosen by each server. Ripple thus publishes its own proposed UNL. 
41. 
Approximately 40% of the nodes validating transactions on the XRP Ledger are 
operated by organizations or entities based in the United States, including Ripple itself. 
42. 
In 2012, Co-Founder hired Larsen to be the CEO of a newly formed company that 
would continue the XRP Ledger and XRP projects.
Case 1:20-cv-10832 Document 4 Filed 12/22/20 Page 8 of 71

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43. 
As CEO, Larsen ran Ripple’s day-to-day operations and was responsible for all 
aspects of company products and strategy and for the growth of and investment in the company.
Larsen solicited and participated in meetings with current and prospective Ripple equity and XRP 
investors and regularly updated Ripple’s Board of Directors and shareholders.
44. 
In September 2012, Co-Founder, Larsen, and Ripple Agent-1 founded Ripple. 
45. 
Upon the completion of the XRP Ledger in December 2012, and as its code was 
being deployed to the servers that would run it, Co-Founder, Ripple Agent-1, and Cryptographer-1 
created—at little cost—the final version of what today is a fixed supply of 100 billion XRP. 
46. 
Co-Founder, Larsen, and Ripple Agent-1 then transferred 80 billion XRP to Ripple 
and the remaining 20 billion XRP to themselves—9 billion XRP each to Co-Founder and Larsen 
and 2 billion XRP to Ripple Agent-1—as compensation for Ripple’s founders. After this transfer, 
Ripple and its founders controlled 100% of XRP. 
47. 
As Cryptographer-1—a well-respected and known Ripple spokesperson—stated in a 
recent tweet (on Twitter): “The people who created XRP are pretty much the same as the people 
who created Ripple and they created Ripple originally to, among other things, distribute XRP.” 
48. 
XRP, also software code, is a digital asset and the native token on the XRP Ledger. 
49. 
Ripple and Larsen originally called XRP “Ripple Credits” and, for several years 
thereafter, participants in the digital asset space simply referred to the digital asset as “Ripples.” 
50. 
Ripple could do little with its billions of XRP at that time, however, and Ripple had 
limited funds to pursue any operations it may have sought to undertake. Ripple determined to 
create a market for and sell XRP to the public to monetize its holdings and finance its operations.