Co- Produced by Ian Kar at FinTechToday and Breaking Banks:
Ripple Labs, the innovative startup focusing on the distributed ledger and supports of the popular Ripple protocol, has raised a $28 million Series A round, the company announced in a press release today.
There are a number of interesting participants in the round, including IDG Capital Partners, the venture capital divisions of CME Group and Seagate Technology, Yahoo! cofounder Jerry Yangâs AME Cloud Ventures, and ChinaRock Capital Management. Smaller participants in the round include Bitcoin Opportunity Corp., Core Innovation Capital, Route 66 Venture, RRE Ventures, and others.
According to the press release, the mixed group of investors is intentional, they “supports the vision for Ripple to enable an Internet of Value (IoV) by powering the real-time, secure settlement of funds for banks and multi-national companies worldwide.â Not only are these investors involved in banking, but also have experience as market makers (an arbitrage service for market liquidity), corporate finance, and other potential uses for the Ripple protocol, like forex.
âOur mission is to modernize decades-old payments infrastructure with IP-based technology so value moves around the world as freely, easily, securely and transparently as information on the web today,â said Ripple Labs CEO and co-founder Chris Larsen. âFinancial institutions, market makers and corporations are laying the foundation for this Internet of Value, contributing and providing liquidity for global payments. With investors like CME Group and Seagate joining the fold, weâre well positioned to accelerate adoption amongst these key customers.â
Li Feng, partner at IDG Capital Partners, will be joining Rippleâs Board of Directors, along with Baidu, Tencent, Xiaomi, and CreditEase.
What Is Ripple Labs?
Ripple Labs uses a distributed, open source, ledger to carry out secure, instant, and nearly free transactions around the world. It supports its native currency, Ripples (XRP), but also fiat currency, cryptocurrency, and other units of value like frequent flier miles.
Because of the different units of values supported and the instant global transfers, the Ripple protocol has a ton of potential in the eyes of entrepreneurs and investors. For instance, users can use the protocol to sell frequent flier miles for dollars or bitcoin; send money to family across the world instantly and for free, which is quite a painful process; and easily and quickly turn fiat currencies into cryptocurrencies, and vice versa. There are a few of high profile startups operating on the Ripple protocol as well, including Epiphyte â a startup that creates enterprise software solutions for financial institutions to securely integrate with cryptofinancial networks and one of the winners of the 2014 Innotribe Startup Challenge.
While Ripple Labs has seen a plethora of praise over the past few years â including a spot on the coveted 50 Smartest Companies list by MIT Technology Review and praise from members of the St. Louis Federal Reserve â the company came under some regulatory heat recently. FinCEN, a bureau of the Treasury Department and the federal body that regulates virtual currency, fined Ripple Labs $700,000 for violating the Bank Secrecy Act. CoinDesk has more details here, but, primarily, Ripple Labs failed to register as a money services business before selling XRP, which cause the company to not properly implement anti-money laundering procedures. However, FinCen and Ripple Labs announced a settlement, which includes the fine and other stipulations, including biannual compliance audits through 2020.