This episode of the My First Million podcast features Sam Parr and Shaan Puri discussing the history of Ripple (XRP), the controversy surrounding its early development, and a wild, hypothetical “hostile takeover” strategy that was once considered. The hosts break down the mechanics of how Ripple operated, the criticism it faced from the crypto community, and the high-stakes, “James Bond-style” plan that was nearly executed to disrupt the network.
Topics: Ripple, XRP, Cryptocurrency, Hostile Takeover, Finance, Crypto History, Market Manipulation
The Origin of Ripple [00:00]
Sam Parr: Have you ever heard of Ripple?
Shaan Puri: Yeah, but they, they’re shady, right?
Sam Parr: Okay, so Ripple was this thing, kind of like, started pretty early on, um, and they had this like, you know, honestly not a bad idea. They were like, “Look, uh, you know, the way the international banking system works today is off this thing called the SWIFT standard.” Ripple was like, “We are going to be a bank-to-bank communication layer that uses blockchain.” Right? So they were like, “We’re going to use blockchain technology with a real use case, which is banks sending money back and forth to each other.” So that was their idea. They got a bunch of funding from Founders Fund and others, and they released this thing called XRP. That’s the name of their token. All right, so whatever. Nobody cares about that, how it works, nobody cares. But the interesting part is XRP has like, was worth a lot. The founders of Ripple became billionaires overnight before, like, that’s the thing with crypto. You can get rich before, like, this open DAO has $130 million before they have a product. In Ripple, those guys became billionaires before banks ever used their product, which is like a really fucked up incentive and which is why sometimes shit doesn’t actually get built in crypto because, “Hey, I already got the millions, I can just run away. I could just do a half-assed job, doesn’t really matter at this point.” I went public on day one.
Ripple’s Market Cap and Reputation [10:03]
Sam Parr: So, Ripple, um, has a market cap right now of, um, 94, is this right? $94 billion? I think I’m reading this right. $94 billion, something like that. No, no, sorry, $44 billion. $44 billion, right? That’s like, that’s like the market cap of like, you know, Bank of America, some shit like that. So, obviously, Ripple’s not actually valued at that. But Ripple had believers and they had early momentum. They were very early into crypto games, they had a lot of PR. And the CEO would go on CNBC and talk about how this is going to change the game. So, what happened? In the crypto community, people were kind of like poo-pooing Ripple. They’re like, “This is like centralized. They, they took way too much share for themselves. They didn’t give enough to users. That’s why these guys are billionaires. Their product kind of sucks, and they’re kind of shady,” whatever, whatever. That’s the reputation was, Ripple, anybody who was in the know in crypto, pretty much the general consensus was, “Ripple’s full of shit.”
The Hostile Takeover Plan [01:58]
Sam Parr: And so my buddy had this idea. He was like, he was like, “I’m going to do the first hostile takeover of a crypto network.” I was like, “What do you mean?” He goes, “Look, I can see every single person’s wallet who owns Ripple.” I was like, “Okay, that’s kind of interesting.” He goes, “But you don’t know their name and all that.” He goes, “I don’t need their name.” I was like, “You don’t have their email address.” He goes, “I don’t need their email address. I could just put something in their wallet, and they’ll wake up and they’ll open their wallet and they’ll see that they have something in it.” I was like, “Okay.” He goes, “So I’m going to go out there, I’m going to say, ‘XRP is stupid for these five reasons. Number one, the founders took way…’”
Shaan Puri: Can you, can you message these people anything?
Sam Parr: You can include a message in the transaction of giving them the thing, like in the memo of the, of the thing. But like, the way you do it is you first drop the token, you tell people, “Hey, if you held Ripple, you got this token today,” and then you write your manifesto on your Twitter or your website about what this is all about. So, it’s like kind of like somebody put a $50 check in your wallet. You’re like, “What’s this all about?” It says, “Go to this website to explain why you just got this $50.” So that’s how this, that’s how this marketing mechanism works. So he was like, “I’m going to put some money in their, I’m going to put my currency in all the Ripple holders’ wallet, and then I’m going to tell them, ‘Ripple is stupid for these five reasons. The founders took too much, this other problem, this other problem, you know, they’re, the, the token is inflationary, blah, blah, blah.’” So I’m going to change all that. “We only take 10%, we are not inflationary, we do not do this sketchy shit, blah, blah, blah.” My five-point plan of how to make Ripple better. Um, and we’re, we’re calling it our own thing. And here’s the deal: if you own Ripple, if you send your Ripple to my wallet, I will send you back five times your value of this, if you’re in the first, for the first 1,000 people that do this. Then for the next 10,000 people that do this, you’re going to get four times your, your Ripple back. And for the next 10,000 people, you’re going to get three times your Ripple back. Because basically there was this urgency of like, “Okay, if these, if this is going to become the next Ripple, if I send my money in now, I’m going to get five, I’m going to get a 5x multiplier on my money.” And what he was going to do was just, he goes, “When you send it to this wallet, we’re going to just dump it. We’re just going to sell it, and we’re going to put so much sell pressure, we’re going to crash the price of Ripple.” So, if you do it early, And did they, did they do this? Or…
Sam Parr: So let me finish the story. So he goes, he goes, “If you do this early, you’re going to get five times your amount, and you’re not going to have to sit there holding the bag while we dump this thing.” It was like a prisoner’s dilemma game theory. It was so genius. He’s like, he’s like, “Here’s the math if you’re, if you’re holding this thing. You have to assess: are other people going to take them up on this offer? If they do, then the Ripple I’m holding is going to go down like crazy. I’m going to go down like 5 to 10x.” If I jump, if I jump ship, I get a 5x multiplier on my money and I don’t sit there holding the sinking ship. And the game theory of this, I think was going to work. So he has this plan, and he starts, and he starts, and so he’s like, “Okay, well, he needs to be credible.” So he went to some very, very wealthy people, and he got about $50 million lined up to do this hostile takeover. And he was like, he needed it to be like $200 million, and so he’s like, “I need to create this huge war chest so I can tell people, ‘Look, we have this much money, so you this it’s backed by something, come on board.’” And he’s like, “Dude, I, he’s like, basically I’m going to these investors, I’m saying, ‘If you give me $200 million, I’m going to take down this project, I’m going to absorb all the value of this project that’s currently worth 40 billion.’” Right? So he’s like, “It’s a huge return for those investors.” And they, and they also don’t even believe in Ripple. So it was this high stakes fucking James Bond shit.
The Leak and the Aftermath [05:18]
Sam Parr: What the problem was, one of the investors that he had went to for this leaked the plan to a journalist. This guy, uh, Dan Primack or whatever, he’s like a pretty famous journalist.
Shaan Puri: Yeah, from Axios.
Sam Parr: Axios. Axios writes the story ahead of time. He says, “Hey, there’s somebody planning a hostile takeover of XRP, and here’s how it’s going to work.” And XRP, the Ripple team obviously sees this, and they’re like, “Okay, just in case,” they, so they sold some amount of their Ripple, um, to create a like, few hundred million dollar buffer, so that if somebody tried to do this and tried to tank the price, they had enough liquidity to buy back the, buy back the tokens and keep the price high. So it kind of foiled his plan where they, the only, the only way it would have worked is if he had caught them by surprise, and he could have done it in like a two-day period, he could have tanked the price of Ripple and created this competitor and had all the momentum on his side. But because they had heads up, they could, they could create enough liquidity and they could be able to like support their price before somebody could do this to them. But how crazy is that, dude?
Shaan Puri: This is like some barbarians at the gate shit. Like, this is like 1980s like Drexel, um, like hostile takeover where they like were were like, what’s it called? Like greenmailing. Have you ever read like these like 1980s finance books?
Sam Parr: I have, I have, I have the book Barbarians, but I haven’t read it yet.
Shaan Puri: Yeah, that’s basically what they did. Like it was like, it was like warfare.
Sam Parr: I was like, “This is some George Soros shit.” You know, George Soros broke the Bank of England. I was like, “This is some George Soros shit.” That’s what he was, that’s actually what he was telling me. He goes, “This is some George Soros shit.” I was like, “What do you mean?” He goes, “George Soros broke the Bank of England by doing something very similar to this.” And as he was explaining, I was like, “There’s no way this works.” He’s like, “Well, you know, it’s risky, but like, if it works…”
Shaan Puri: Who, who did it?
Sam Parr: In, so he didn’t, he didn’t end up doing it.
Shaan Puri: But I mean, who, who’s the, is it an article, is it public?
Sam Parr: Uh, I don’t know if it’s public, but I’ll tell you, it’s our friend who, you remember we went to dinner after our live show in Miami? It’s our friend we went to dinner with.
Shaan Puri: Yeah, okay, okay.
Sam Parr: Yeah.
Shaan Puri: Um, that’s crazy. I thought, uh, if, if Dan would have wrote about it, he would have named him.
Sam Parr: Yeah, I think he didn’t know the name, or he, I don’t think he included the name in the thing. But how fucking nuts is that?
Shaan Puri: That’s crazy if you, if that person could have pulled it off, that’s wild. This is Barbarians at the Gate shit, hostile takeover stuff.
Sam Parr: Yeah, I love it.