Ripple Labs board member Jesse Powell resigns amid ongoing controversy

Last week, not-quite alt-coin Ripple found itself facing an existential crisis when co-founder Jed McCaleb revealed he was planning to sell off his 9 billion XRP stash. The announcement caused a dramatic XRP price crash, halving Ripple’s currency value in less than a 24 hours. McCaleb’s planned cash-out also hinted at deeper problems behind the scenes at Ripple Labs, a scenario seemingly confirmed by the resignation of founding investor Jesse Powell from the company’s board.

In a post on the Ripple Reddit, Powell (also the CEO of popular cryptocurrency exchange Kraken) explained his reasons for leaving:

Today I have submitted my resignation from the Board of Ripple Labs. While I care about the people who work there and I wish the company the best, I cannot personally continue to support the business. … I believe that the technology and the protocol hold great promise, and have since the beginning, which is why I was the company’s first investor. Since Jed’s departure, the management of the company has taken a different direction. Sadly, the vision Jed and I had for the project in the early days has been lost. I’m no longer confident in the management nor the company’s ability to recover from the founders’ perplexing allocation to themselves of 20% of the XRP, which I had hoped until recently would be returned. Prior to Jed’s departure from Ripple, I had asked the founders to return their XRP to the company. Jed agreed but Chris declined—leaving a stalemate. This afternoon, I revisited the allocation discussion with the pair and again, where Jed was open, Chris was hostile. … As an investor, of course, I hope that Ripple Labs will overcome its hurdles and prove my lack of confidence misplaced. Unfortunately, unlike the founders, I don’t have swathes of XRP to dump if I don’t think it’s working out.

Shortly after posting these details to Reddit, Powell was sent a letter by Ripple Labs counsel George Frost demanding that he retract various statements made on Reddit and other public forums. Powell posted the original letter, as well as his response, to a publicly visible Google Docs page.

The tense situation at Ripple has larger implications for the greater cryptocurrency community. Although technically a virtual currency, Ripple was designed as a trustless payment network that could allow easy transactions of any form of currency or commodity, including bitcoin. Only a few weeks ago, Munich-based online financial services provider Fidor Bank announced it would be incorporating Ripple’s protocol into its payment system.