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Ripple cryptocurrency crashes after MoneyGram ices deal

Ripple cryptocurrency crashes after MoneyGram ices deal
Written by publisher team

Ripple Labs’ cryptocurrency plummeted on Tuesday after MoneyGram said it had temporarily suspended its relationship with the tech company while it was battling the feds in court.

The price of XRP – the digital currency at the center of a lawsuit filed by the Securities and Exchange Company against Ripple – fell nearly 22 percent to nearly 47 cents as of 2:10 pm after MoneyGram revealed it had suspended trading on the Ripple platform.

The two companies struck a deal in 2019 in which MoneyGram used XRP to settle cross-border payments while Ripple paid the company a “market development fee,” which totaled about $50 million last year.

But MoneyGram suspended the arrangement in December as the SEC accused Ripple of illegally raising more than $1.3 billion by selling virtual currency, CEO Alex Holmes said Monday.

Holmes said the money transfer giant wanted to continue working with Ripple but decided to put the partnership on ice out of “extreme caution.”

“I certainly hope that they will be successful in their efforts with the Securities and Exchange Commission and that things will go in the direction they want them to,” Holmes said on Monday’s earnings call. “I would say that right now, we are pausing these activities.”

Ripple said its multi-year contract with MoneyGram is still valid. The embattled company noted that some market participants were “reacting conservatively” to the SEC’s lawsuit, which it said “unnecessarily reversed waters and introduced more market uncertainty.”

“We look forward to finding a path forward with MoneyGram and are confident that there will be more regulatory clarity in the United States for the use of digital assets and blockchain technology at the end of this lawsuit,” Ripple said in a statement.

Ripple and the Securities and Exchange Commission have agreed to take the case to trial by jury in Manhattan federal court, according to a Monday report in the case.

At the heart of the issue is whether XRP – the world’s seventh largest cryptocurrency by market capitalization – is a security, like a stock, that must be registered with the Securities and Exchange Commission under federal law.

The SEC alleges that Ripple CEO Brad Garlinghouse and co-founder Christian Larsen personally sold $600 million worth of XRP while the company sidestepped disclosure rules intended to protect investors.

But Garlinghouse’s attorney, Matthew Solomon, alleged in a court hearing Monday that the SEC failed to tell “super-sophisticated market players” that it believed XRP was a security firm as recently as 2019, according to Law360.

“This whole affair is gross inflation,” Suleiman reportedly said.

Tuesday’s drop in XRP came amid a massive sell-off in the cryptocurrency market which saw bitcoin, ether and dogecoin plummeting deep into the red.

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