As a partner of Ripple and its XRP token, MoneyGram has recently distanced itself from this. But too late? The money transfer specialist is facing a lawsuit accusing him of making misleading statements.
Is MoneyGram a collateral victim of Ripple’s troubles and his XRP token? The SEC, the US stock exchange regulator, accuses them of issuing without security clearance. Ripple refutes any wrongdoing.
As Ripple’s partner and beneficiary of XRP, MoneGram is in turn caught in the turmoil. Aware of the legal risk, the money transfer service was giving up the company’s money.
Too late, it seems. One complaint now targets MoneyGram. The firm is accused of making misleading statements. In addition, it is accused of failing to disclose the status of XRP, an “unlicensed security. »
A collective action has therefore been targeting the company since March 1. The lawsuit has been filed in the California courts. It is brought by investors who purchased MoneyGram securities between June 17, 2019 and February 22, 2021.
The company is thus singled out for its “strategic partnership” with Ripple. Formalized in June 2019, it included the use of Ripple’s xRapid. And it included “the use of XRP in foreign currency settlements” as part of its cross-border payment process.
However, MoneyGram denied this on December 23, after the SEC complaint. Already it was distancing itself from its partner. “MoneyGram does not use the ODL or RippleNet platform for direct transfers of consumer funds – digital or otherwise. »
And at the end of February, the payment service also suspended its partnership. For the plaintiff, this is insufficient and too late. MoneyGram allegedly failed to disclose that XRP was considered an unregistered security and illegal by the SEC.
Moreover, in the event of an unfavorable court decision, the prejudice would be substantial for MoneyGram. The company would lose the lucrative stream of market development fees collected from Ripple. However, these are not negligible in its accounts.
According to the Wall Street Journal, MoneyGram received $38 million in net development fees from Ripple in 2020. This represents approximately 15% of the company’s adjusted earnings.
“As a result, the defendants’ public statements were materially false and/or misleading at all relevant times,” the complaint states. As a result, “investors have suffered damages. »