Jed McCaleb

Jed McCaleb is the founder of the cryptocurrency exchange MtGox, co-founder of Ripple Labs and Stellar.

Childhood and early career

Jed McCaleb was born in 1975 in Little Rock, Arkansas, USA. He graduated from high school there and later entered the University of California, Berkeley, where he majored in programming.

However, McCaleb quickly dropped out of school and moved to New York, where he worked as a programmer for various organizations. In 2000, Jed founded MetaMachine Inc. which produced the eDonkey file-sharing network and the eDonkey2000 application.

At that time, he met Harvard University graduate Sam Yagan. Yagan joined eDonkey a year after it was founded and became CEO, while McCaleb remained CTO.

A little later, Jed created the Overnet network protocol, which created a decentralized environment for file storage. But in 2006, the Recording Industry Association of America (RIIA) filed claims against McCaleb and his projects, and forced him to stop distributing the applications and pay a $ 30 million fine.

At its peak, the eDonkey2000 application grew to 4 million users.

Jed McCaleb and cryptocurrencies

In 2007, Jed purchased the domain name Mtgox.com with the intention of creating a website to sell Magic: The Gathering game. But after a while, he abandoned the original idea. At the end of 2010, McCaleb launched a bitcoin trading exchange, and a few months later, the exchange gained immense popularity.

In February 2011, McCaleb sold MtGox to Mark Karpeles, but remained its minority owner until the collapse in 2014.

In June 2011, hackers broke into MtGox, emptying several large wallets and hundreds of accounts of ordinary users. Later, an attempt to sell the stolen goods led to a drop in the bitcoin rate from $ 17 to almost zero. The platform suspended operations for several weeks.

Problems plagued McCaleb’s brainchild until 2014: hackers stole $ 460 million worth of cryptocurrency from the site’s users. The company itself lost more than 27 million in its bank accounts.

Some traders believe McCaleb is responsible for the systematic hacking of MtGox in 2011 and 2014. The programmer denies the accusations, pointing to a long time gap between the sale and the attacks.

Ripple

In 2011, McCaleb joined Ryan Fugger, who was engaged in the realization of the idea for the Ripple project. After getting one of the main management positions at Ripple Labs, he hired David Schwartz and also received an investment from Jesse Powell, who now runs the Kraken exchange.

A little later, McCaleb hired Arthur Britto as a development manager and then hired Chris Larsen as CEO of the new company, which was known as OpenCoin (later Ripple). He was actively working on the creation of the platform until June 2013, but then was forced to leave the company.

Later, Jed wrote that the reason for this was a difference of opinion on the company’s development. Former employees and investors have a different point of view — McCaleb divorced his wife and started dating Joyce Kim, the founder of an unpromising dating startup, which Ripple Labs later bought out.

Together, they tried to find a place for Joyce in the company and strengthen Jed’s position, sometimes resorting to absurd methods. In May 2013, Vice journalist suggested that Satoshi Nakamoto, the creator of bitcoin, might be McCaleb. In 2015, Ripple Labs employees said that it was Joyce Kim who started the rumors to flatter her boyfriend’s ego.

Thanks to his work at Ripple Labs, Jed managed to accumulate a large amount of savings in XRP coins. It is rumored that at the peak of prices in January 2018, his fortune reached $ 20 billion. This put him on the 40th place in the list of the richest people in the world according to Forbes. But there is no confirmation of this information.

Stellar

His departure from the then successful Ripple company, which was being developed by one of the most professional teams in the world, was also provoked by the significant centralization of the project. Jed himself has repeatedly stated this. Realizing the promise of the technologies embedded in Ripple, McCaleb decided to create a similar product that would be more in line with the principles of decentralization.

Thus, in 2014, together with Joyce Kim, he co-founded the non-profit organization Stellar Development Foundation. This foundation was created to develop the Stellar open-source protocol, which allows for cross-border money transactions, including fiat and digital currencies. The organization was registered on July 31, 2014 and received a $ 3 million loan from the technology company Stripe.

Initially, Stellar DF developed its payment network on the Ripple protocol, which McCaleb created earlier, but in 2015 it adopted its own Stellar Consensus protocol. Jed McCaleb is currently the chief technology officer of Stellar.

A little later, in May 2017, McCaleb launched the lightyear. io website, a project that promotes Stellar’s development as a global payment and currency network. In October 2017, Lightyear entered into a partnership agreement with IBM to facilitate cross-border transactions in the South Pacific region using the XLM local currency. The international payment system developed by IBM includes partnerships with local banks.

In September 2018, McCaleb agreed to merge Lightyear and Chain.com, creating a new combined entity called InterStellar.

Some of Stellar’s actions cause outrage among enthusiasts. In 2019, the company destroyed 55 billion tokens that had not yet gone into circulation, justifying it with optimization. Allegedly, this way, the entire platform will work more efficiently, since such a large number of coins is not needed. At the same time, the price of XLM instantly increased by almost 20%.

However, crypto analysts doubt the usefulness of Jed’s developments (XLM is often associated with XRP), calling them toxic. The platforms have not replaced the interbank payment system, but they have attracted the attention of financial regulators in different countries.

Ripple and Stellar, both conceived as platforms for the free exchange of funds, have not become a massive alternative to interbank transfers for individuals or companies. In 2021, more than 30 of the world’s largest banks worked with XRP in one way or another, but so far, everything is limited to small cross-border transfers.

Today, Stellar is integrated with Stripe, which became the most expensive startup in Silicon Valley in early 2021. The exact number of wallets with linked XLM accounts is unknown, but the companies hope to further develop payments through the decentralized currency.

Other information

• McCaleb’s participation in any cryptocurrency project almost instantly attracts the interest of market participants and makes the project popular without any PR campaigns.
• Moreover, McCaleb constantly speaks negatively about various cryptocurrencies. He claims that 90% of all cryptocurrencies that currently exist are garbage, including TRON. Jed is a fan of cryptocurrencies such as Bitcoin, Ethereum, and Stellar. However, in his opinion, many financial organizations will never use bitcoin because of its low network bandwidth.
• As for McCaleb’s Twitter account, he has almost 30,000 followers, and each post garners about 100−200 likes. Most often, McCaleb posts news related to the development of Stellar on Twitter.

• According to unofficial data, Jed McCaleb’s fortune is estimated at $ 5 billion, including 5 billion XRP, which he can sell in installments under an agreement with Ripple.
• Jed spends money not only on himself — in 2016, he donated two million XRP (about one million dollars) to charity. Part of the payments are reserved and blocked on the wallets of McCaleb’s two children and other family members.