MoneyGram, a money-transfer company, announced that it would suspend its partnership with Ripple and XRP. This comes after the US Securities and Exchange Commission sued Ripple for violating investor protection laws.
MoneyGram previously used XRP in its back office to fund cross-country transfers which reduced the risks that come with foreign exchanges by offering real-time settlements through Ripple’s technology. Notably, the partnership was expected to reduce working capital needs and generate revenue and cash flow for Ripple and MoneyGram. However, after the SEC sued Ripple, the company said it faced legal and reputational risks by using the platform as well as logistic challenges.
Caption: MoneyGram will no longer use XRP for cross-border transfers
This happened well before the partnership between the companies was due to expire. The loss of the fees and the decline in investment revenue because of lower interest rates are expected to weigh on its first-quarter report. However, according to Ripple’s Chief Financial Officer Larry Angelilli, MoneyGram is still working with Ripple to find possible alternatives.
The Ripple CFO said that if a resolution to the case comes, especially of Ripple prevails, he expects that there won’t be any problems. However, he notes that this may take some time before it happens.
Ripple also said in a statement that it wants to find a middle path and move forward with MoneyGram. The company added that the confidence lawsuit would provide more clarity on the SEC’s treatment of blockchains and digital assets in the US.
The options for MoneyGram are unclear as there are no comparable alternatives to facilitate cross-border transfers in real-time for the company. Regardless, if XRP is filled as a security, MoneyGram said it would halt trades using Ripple XRP completely.
MoneyGram’s stocks dove by 28% to $7.77 after the company released its quarterly results on Monday and fell to $6.67 after closing on Friday.