As per a study conducted by analytics firm Coin Metrics, three major discrepancies have been identified between what was publicly reported by Ripple and what was visible on the XRP ledger:

  1. Ripple’s Q3 2018 and Q1 2019 quarterly market reports under-reported the number of XRP released from escrow by 100 million in each quarter, equalling to a total of 200 million XRP ($84 million at current prices)

On December 16th, 2017, Ripple placed 55 billion XRP in an escrow account. It announced that “We’ll use Escrow to establish 55 contracts of 1 billion XRP each that will expire on the first day of every month from months 0 to 54. […] We’ll then return whatever is unused at the end of each month to the back of the escrow queue. For example, if 500M XRP remain unspent at the end of the first month, those 500M XRP will be placed into a new escrow account set to expire in month 55

However, the amount reported in the quarterly report vs actual Ledger differed.

Source: Coin Metrics

  1. A different implementation of “escrow queue”, leading to a faster future release of escrowed funds compared to the announced schedule

Repeating Ripple’s description of escrow mechanism, “For example, if 500M XRP remain unspent at the end of the first month, those 500M XRP will be placed into a new escrow account set to expire in month 55”

This would have made the XRP distribution curve as follows:

Source: Ripple.com

However, in reality, as per Coin Metrics, in February (month 1) they unlocked 1 billion XRP and used 100 million of it. Instead of locking another 900 million XRP in month 56 (55+1)(September 2022), the first month in which no escrow was scheduled to release, the remaining 900 million were escrowed in two different contracts: one of 100 million XRP expiring on month 55, putting the XRP escrowed for that month at 1 billion XRP, and another one of 800 million XRP expiring on month 56.

Source: Coin Metrics

According to Ripple’s original description of the escrow mechanism, all of the unused funds in month 1 of the scheme should have been scheduled to release in month 56.

The new mechanism has changed the XRP distribution curve as below:

Source: Coin Metrics

This modified scheme has in effect accelerated the release schedule of XRP, compared to the strict escrow scheme.

  1. Other party/parties, potentially associated with Ripple, have released 55 million XRP from an unknown escrow address not connected to the main Ripple escrow account.

On November 16th, 2018, 200 million XRP owned by other party account rNfwFmsgBRrtqQDcWtFAJMzK2P1yCs7XPy (who had received the XRP from an address known to be associated with Ripple) was escrowed into 40 contracts of 5 million XRP each, expiring semi-monthly on the 1st and 15th of each month between December 1st, 2018 included to July 15th, 2020 included.

Justification by Ripple:

Clarification was sought by Coin Metrics from Ripple on the above points. The initial response was delayed.

David Schwartz, CTO of Ripple have now replied to Coin Metrics via a series of tweets:

“This is simply a timeline issue. We tweaked the timeline in 2018 to reflect transactions that happened each month of the quarter rather than linking returns to date of initial escrow release. Ex: a March escrow release returned in April is considered a Q2 event, not Q1.We plan to add some additional language in future markets reports in our continued efforts to be the most transparent in the industry”

Reference: Ripple Moves 1 Billion XRP from its Escrow Wallet

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