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Moneygram Halts Using Ripple Due to SEC Lawsuit Over XRP Cryptocurrency – Regulation Bitcoin News

Moneygram Halts Using Ripple Due to SEC Lawsuit Over XRP Cryptocurrency
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Moneygram has announced that it has stopped using the Ripple platform due to a lawsuit against Ripple Labs and its executives by the US Securities and Exchange Commission (SEC). Last year, the company earned $50.2 million from Ripple for using the platform.

Moneygram discontinued using the Ripple platform

Moneygram International on Monday announced the suspension of trading on the Ripple platform. The announcement was made as part of the company’s fourth-quarter and full-year earnings report. For 2020, Moneygram reported total revenue of $1,217 million; Its fund transfer revenue was $1,105 million.

As part of its Q1 2021 outlook detailed in the report, Moneygram wrote that it “does not plan any benefit from Ripple market development fees in the first quarter,” adding:

Due to uncertainty about ongoing litigation with the Securities and Exchange Commission, the company has suspended trading on the Ripple platform.

How much does Ripple pay for MoneyGram?

The company explained that Moneygram has entered into a commercial agreement with Ripple since June 2019 to “use Ripple’s forex trading platform (ODL) to buy or sell four currencies.” The platform uses the cryptocurrency XRP. Its use by Moneygram is backed by Ripple.

In its earnings statement Monday, Moneygram revealed that “in the first quarter of 2020, the company generated a net expense benefit of $12.1 million from Ripple market development fees.” In the fourth quarter, it earned “a net interest of $8.5 million from a Ripple market development fee of $9.2 million, which was partially offset by transaction and related trading expenses of $0.7 million.”

Meanwhile, its financials for 2020 and 2019 include Ripple market development fees of $50.2 million and $11.3 million, respectively. These numbers were partially offset by related transactions and trading expenses of $11.9 million and $0.4 million, respectively.

Moneygram cites the SEC lawsuit as a reason to suspend use of the Ripple platform

The Securities and Exchange Commission (SEC) filed a lawsuit in December against Ripple Labs Inc. Its CEO, Brad Garlinghouse, and co-founder Christian Larsen, accused them of conducting a bid for unregistered securities worth $1.3 billion of the cryptocurrency XRP.

The suit, filed by the SEC, alleges that “a lot of ODL accessions were not organic or market-driven. Rather, they were backed by Ripple.” The regulator further described: “While Ripple is promoting ODL as a cheaper alternative to traditional payment rails, at least one MTM has found it… to be significantly more expensive and therefore not a product they would like to use without significant compensation from Ripple.”

Without naming the money sender in question, the Securities and Exchange Commission explained that “the sender has served Ripple’s primary purpose in exchange for significant financial compensation,” adding:

The money transmitter has become another channel for Ripple’s unregistered sales of XRP in the marketplace, with Ripple getting the added benefit of being able to promote inorganic XRP and XRP trading volume.

What do you think of Moneygram’s decision to stop using the Ripple platform? Let us know in the comments section below.

Kevin Helms

Kevin, an Austrian economics student, found bitcoin in 2011 and has been a missionary ever since. His interests lie in Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

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