In a fresh blow for Ripple, MoneyGram has announced it is suspending trading on the platform. The news follows legal action taken against Ripple by the U.S. Securities and Exchange Commission (SEC.)
As a result of the company’s ongoing legal troubles, MoneyGram made the decision to step away from Ripple — stating in its first quarter 2021 outlook:
“The 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.”
The two companies had previously established a mutually beneficial arrangement, with incentives offered by Ripple to MoneyGram, classing these payouts as “market development fees” instead of revenue. Thanks to the use of RippleNet, Ripple’s payments solution, MoneyGram was able to utilize XRP as part of its cross-border payments process for forex payments.
In a recent news release, MoneyGram revealed that it received incentives worth $8.5 million from Ripple in the fourth quarter of 2020.
The Case Against Ripple
On Dec. 22, the SEC announced that it would be taking legal action against Ripple, alongside its co-founder Christian Larsen and CEO Brad Garlinghouse.
The company and its executives are accused of amassing $1.3 billion by selling XRP tokens through an unregistered, ongoing digital asset securities offering.
It’s also claimed that Ripple distributed billions of XRP in exchange for labor, market-making services, and other non-cash considerations.
MoneyGram clarified its relationship with Ripple in a press release the following day, writing:
"As a reminder, 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."
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