MoneyGram announced that it has suspended using Ripple Labs’ platform because of the lawsuit the U.S. Securities and Exchange Commission filed against the company. The announcement came as a part of MoneyGram’s earnings report for the last quarter and full year 2020.
MoneyGram reported total revenue of $1.217 billion for the year, with $1.105 billion in revenue from money transfers. However, MoneyGram also wrote that it does not plan to benefit from Ripple market development fees for the first quarter of 2021.
It should be noted that the earning reports from MoneyGram for 2010 and 2020 included development fees from Ripple valued at $11.3 million and $50.2 million, respectively. These earnings were partially offset by trading and related transaction expenses of $0.4 million and $11.9 million.
Caption: Photo Credits: Ripple and MoneyGram partnership canceled for first quarter of 2021
MoneyGram and Ripple had a commercial agreement since mid-2019 that allows Ripple’s foreign exchange blockchain trading platform to purchase or sell four currencies. The platform utilizes Ripple’s XRP as its main currency, and Ripple subsidizes MoneyGram’s use.
MoneyGram cited the US SEC lawsuit as the main reason for its suspension of Ripple’s Platform use. This lawsuit alleges that Ripple Labs and two of its top executives, CEO Brad Garlinghouse and co-founder Christian Larsen, knowingly conducted over $1.3 billion of unregistered securities offering of their cryptocurrency, XRP.
The US SEC alleges that most of the XRP’s onboarding onto ODL wasn’t market-driven or organic and that Ripple subsidized them. The regulator also mentioned a money transmitter without naming it. The US SEC detailed that the money transmitter served its principal purpose that allowed Ripple to tout ODL as a cheaper alternative in exchange for significant financial compensations.
The US SEC added that the unnamed money transmitter became a conduit for Ripple’s unregistered XRP sales into the market. It also said that this enabled Ripple to receive added benefits that let it tout its organic XRP “use” and trading volumes for the token.
