Ripple confirms it cannot access 38 billion XRP tokens held in escrow, as control lies with the XRP Ledger's smart contracts.
Legal ownership of XRP does not grant Ripple authority to bypass network-enforced escrow conditions for locked tokens.
The escrow system was introduced to avoid market disruptions by regulating token release and limiting direct control by Ripple.
Ripple's lead software engineer at RippleX, Mayukha Vadari, has clarified that the blockchain company does not technically hold the 38 billion XRP currently locked in escrow. According to Vadari, the XRP Ledger itself manages the locked funds, acting as the escrow agent through smart contracts embedded in the protocol.
Vadari emphasized that Ripple cannot access or move these tokens before their scheduled release. The ledger’s smart contract system ensures that the funds remain secure and inaccessible until predefined unlock conditions are met. This setup was designed to ensure transparency and build trust within the market by preventing sudden large-scale XRP movements.
Legal Control Remains with the Network, Not Ripple
Legally and technically, the XRP tokens in escrow are not considered to be in Ripple’s possession. Although the company initiated the escrow, it does not have the authority to bypass or manipulate the unlock schedule. This mirrors earlier explanations provided by Ripple Chief Technology Officer David Schwartz, who stated that entities placing funds into escrow do not retain control over those funds.
Ripple still maintains a significant amount of XRP outside escrow, approximately 4.9 billion tokens, as noted in the company’s last markets report before the series was discontinued. The remaining 38 billion XRP are set to be released on a monthly schedule governed by the ledger’s escrow mechanics, with any unused tokens re-entering escrow.
Purpose of Escrow Linked to Market Stability
When the escrow was originally introduced, Ripple locked 55 billion XRP to calm concerns that large token releases might impact XRP’s market price. This action was intended to offer predictability to the supply dynamics and ensure market participants that Ripple would not flood the market unpredictably.
Earlier this year, Ripple CEO Brad Garlinghouse stated the company owns over $100 billion worth of XRP tokens. However, Ripple distinguishes between ownership and actual access. The escrow mechanism ensures that the company cannot access the bulk of its holdings until each month’s scheduled release.
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