United States, Feb 22, 2021 /AlexaBlockchain/ – MoneyGram has suspended trading on Ripple’s platform in light of the US SEC’s latest action against Ripple Labs, Inc.
What is SEC’s Lawsuit against Ripple Labs, Inc.?
On December 22 last year, The US Securities and Exchange Commission (SEC) filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering. The value of XRP, the token associated with Ripple, crashed over 40% after the announcement.
In 2019, Ripple agreed to invest up to $50 million in MoneyGram as part of a two-year partnership that has seen the international money transfer player tap the blockchain startup’s XRP digital currency for cross-border payment and foreign exchange settlement.
Ripple has effectively been paying MoneyGram to use its on-demand liquidity service, with the money transfer outfit seeing a “net expense benefit” of $12.1 million from Ripple market development fees in the first quarter of 2020.
The SEC lawsuit against Ripple Labs Inc. mentions the MoneyGram-Ripple partnership, although not the company by name, saying: “The Money Transmitter became yet another conduit for Ripple’s unregistered XRP sales into the market, with Ripple receiving the added benefit that it could tout its inorganic XRP ‘use’ and trading volume for XRP.”
Reporting its fourth quarter results, MoneyGram now says: “[T]he Company is not planning for any benefit from Ripple market development fees in the first quarter. Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple’s platform.”
