MoneyGram said it has suspended trading on the Ripple platform due to the ongoing lawsuit with the US Securities and Exchange Commission (SEC)
Global money transfer service MoneyGram announced it has paused its relationship with blockchain payments company Ripple (XRP), citing Ripple’s ongoing legal dispute with the US Securities and Exchange Commission. As a result, MoneyGram will not use XRP to process international settlements until the SEC case is resolved.
In its quarterly outlook report, MoneyGram said it does not expect to benefit from Ripple during the current quarter due to the present situation. The company stated: “Furthermore, the company does not expect to benefit from Ripple’s market development fees during the first quarter.”
Ripple and several of its executives are facing a lawsuit from the SEC alleging that the firm issued and sold unregistered securities in the form of XRP tokens. The SEC claims Ripple offered and sold unregistered securities to the public.
MoneyGram added that “Due to the uncertainty surrounding their ongoing litigation with the SEC, the company has suspended trading on the Ripple platform. In the first quarter of 2020, the company recognized $12.1 million of net benefits from Ripple market development fees.”
The suspension of Ripple on MoneyGram is likely to affect the money transfer company’s earnings for the first quarter. The company said: “Based on the combination of these factors, the company expects to report adjusted EBITDA of approximately $50 million for the first quarter of 2021.”
The collaboration between Ripple Labs and MoneyGram began three years ago when the money transfer service integrated XRP into its payment system. The two firms formalized a partnership a year later, working together on cross-border payments and currency settlements using digital assets.
Ripple strengthened that partnership with a $50 million investment in November 2019, representing a roughly 10% stake in MoneyGram. However, Ripple later sold $15 million worth of its shares in MoneyGram in December 2020.
MoneyGram is not the only financial institution to respond to Ripple’s legal troubles with the SEC. Several cryptocurrency exchanges have suspended XRP trading or removed the token from their platforms. Although the lawsuit initially pushed XRP’s price lower, the token has largely recovered in recent months and is trading above $0.50 on most exchanges.