Ripple, R3 settle billion dollar blockchain dispute. For how much?

Ripple and R3 have been in litigation since September last year over a dispute which was worth up to $18.3 billion to R3 at peak cryptocurrency valuations. Yesterday Ripple released a two-sentence statement saying there was a confidential settlement. Below is a summary of the dispute and some thoughts about the possible motivations for the settlement and how hard it’s going to be to keep the settlement completely secret.

The dispute

In September 2016 Ripple and R3 entered into an agreement whereby R3 would promote Ripple to its consortium of banks. However, the lawsuit refers to the agreement as a ‘Technology Provider Agreement’ (TPA). Additionally, a separate option contract was created, which Ripple says was intended as compensation. The option gave R3 the right to buy 5 billion XRPs at $0.0085 at any point until September 2019. At the time of the agreement the XRP price was a little below that. On 12 June 2017, Brad Garlinghouse the CEO of Ripple informed R3 it was terminating the agreement, allegedly on the basis that R3 had not upheld its side of the bargain. On that date, the XRP price was 28 cents, and the option was worth $1.35 billion. It appears the promotion contract failed to stipulate performance clauses such as the number of banks introduced by R3 to Ripple. Instead, there was a clause requiring both parties to act in good faith.

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