MoneyGram Is Facing A Lawsuit Over Alleged False XRP Statements

Moneygram is facing a lawsuit over making false statements regarding XRP and for failing to disclose XRP’s status as unlicensed security, as we can see more in today’s Ripple news.

Payments company MoneyGram International was sued over allegedly false statements that were made regarding its partnership with Ripple Labs and their XRP Cryptocurrency. The class-action lawsuit was submitted on behalf of investors that purchased securities from the platform between June 17, 2019, and February of this year. The investor rights legal practice asserts MoneyGram made fraudulent statements regarding the partnership with Ripple Labs and the status of the coin as security.

According to a post that announced the strategic partnership between two companies in June 2019, Moneygram started using Ripple’s xRapid product and leveraged XRP in foreign exchange settlements as a part of its cross-border payment process but later on, the company clarified that it is not dependent on Ripple’s xRapid service for the foreign exchange trading needs which eventually got rebranded to On-Demand-Liquidity in 2019:

 “MoneyGram does not utilize the ODL platform or RippleNet for direct transfers of consumer funds – digital or otherwise. Furthermore, MoneyGram is not a party to the SEC action.”

Moneygram is facing a lawsuit after suspending the partnership with Ripple when the US Securities and Exchange Commission filed a complaint alleging that Ripple broke securities laws in December 2020. Rosen alleged that MoneyGram failed to disclose that XRP Was indeed seen as unregistered security by the SEC. If SEC Enforces the laws against Ripple, MoneyGram would lose the lucrative stream of the market development fees that was critical to the financial result:

 “As a result, defendants’ public statements were materially false and/or misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.”

Ripple paid MoneyGram for using the platform while providing financial incentives for helping the platform expand into new markets. The Wall Street Journal reported that the payments giant received $38 million in the net market development fees from Ripple in 2020 which represents 15% of the adjusted earnings of the company. The agreement between these two companies was due to expire in 2023 as the fintech firm agreed to invest about M in MoneyGram.
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As reported recently, Moneygram suspended trading on Ripple as it changed the relationship with the blockchain payments company amid the litigation with the Securities and Exchange Commission.