In a recent social media post, Ripple CTO David Schwartz clarified that the establishment of the escrow actually prevented Ripple from selling as much XRP as it wanted.
"Before the escrow, Ripple could have sold as much XRP as it wanted every month."
This comes after a user stated that Schwartz established the Ripple Escrow system to systematically dump 1 billion XRP onto the market every month to "fund his career" at the expense of retail investors.
Defending Musk's taxes
The conversation starts with a defense of Elon Musk, pivots to an attack on Ripple's XRP sales, and culminates in a surprising revelation about the history of Ripple's famous Escrow.
The conversation begins with Schwartz correcting a common misconception regarding billionaires and taxes.
The critic argues Musk's tax rate is low (1.43%) because they are comparing his tax bill ($10B) to his total wealth ($700 billion).
However, you are taxed on what you earn or sell, not on what you own. If Musk doesn't sell his stock, he hasn't "earned" that money in a taxable sense yet. Hence, you cannot tax unrealized gains as if they were cash in a bank account.
The surprise
In 2017, Ripple locked 55 billion XRP into a series of escrows to release 1 billion per month. This was marketed as a way to create predictability and certainty for investors.
The escrow was a restriction. Before 2017, Ripple had total access to their holdings and could have sold more than 1 billion a month if it chose.
Schwartz reveals he actually voted against the escrow. Why? He valued operational flexibility. He didn't think the "upside" was worth the "downside" (Ripple losing the ability to access their capital freely). This contradicts the narrative that Ripple execs love the escrow.
Moreover, the Ripple CTO has opined that traders have already adjusted the price of XRP today to account for those future sales.
"And if you think about it, everything people know will happen and expect to happen should already be built into the current price," he said.
