MoneyGram said it had suspended trading on Ripple’s platform due to the firm’s ongoing litigation with the US Securities and Exchange Commission (SEC)
Global money transfer service MoneyGram said it had suspended its relationship with blockchain payments firm Ripple (XRP), citing Ripple’s ongoing lawsuit with the SEC. Hence, MoneyGram will not be using XRP to handle international settlements until the SEC’s litigation is resolved.
In its quarterly outlook report, MoneyGram said it doesn’t expect to benefit from Ripple in the current quarter due to the current situation. The company wrote, “In addition, the Company is not planning for any benefit from Ripple market development fees in the first quarter”.
Ripple and some of its executives are facing lawsuits from the Securities and Exchange Commission for issuing and selling securities in the form of XRP tokens. According to the SEC, the blockchain payments firm issued and sold unregistered securities to the general public.
MoneyGram added that “Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple’s platform. In Q1 of 2020, the Company realised a net expense benefit of $12.1 million from Ripple market development fees”.
The suspension of Ripple on MoneyGram is likely to affect the global money transfer service company’s earnings in the first quarter. The company said, “Based on the combination of these factors, the Company anticipates reporting Adjusted EBITDA of approximately $50 million in the first quarter of 2021”.
The collaboration between Ripple Labs and MoneyGram began three years ago when the money transfer service company integrated XRP into its payment system. Ripple and MoneyGram entered into a partnership a year later. The partnership saw the two companies work on cross-border payments and foreign exchange settlements using digital assets.
Ripple boosted the partnership with a $50 million investment in November 2019, giving it a 10% stake in MoneyGram. However, Ripple later sold $15 million of its stocks in MoneyGram in December 2020.
MoneyGram isn’t the only financial institution to react to Ripple’s ongoing troubles with the SEC. Several cryptocurrency exchanges have suspended XRP trading or delisted the coin from their platforms. Although the lawsuit initially led to XRP’s price decline, the coin has mostly recovered over the past few months and is trading above $0.5 on most exchanges.