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Publicly-traded remittance firm MoneyGram has suspended its use of Ripple’s payments network citing the blockchain firm’s ongoing legal fight with the U.S. Securities and Exchange Commission (SEC). In December 2020, the U.S. SEC filed a regulatory lawsuit against Ripple Labs Inc. and two of its executives, alleging that they had raised over $1.3 billion through an unregistered and ongoing digital asset securities offering. Meanwhile, Ripple has denied the allegations and has vowed to fight back the SEC’s allegations.
MoneyGram is the Latest Firm to Distance from Ripple
Since 2019, Ripple has been paying MoneyGram to use the XRP token in international settlement. By using RippleNet, MoneyGram was leveraging XRP tokens in forex settlements as part of its cross-border payments process.
Ripple followed with a $50 million investment in November 2019 in exchange for a 10% stake in the company. As of December 2020, Ripple Labs sold roughly $15 million of the MoneyGram stock. Since then, MoneyGram has netted $61.5 million in market development fees from Ripple.
In a press release, MoneyGram stated on distancing itself from Ripple Labs:
“Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple’s platform.”
Over the past two years, Ripple paid $50.2 million and $11.3 million, respectively, to MoneyGram in addition to Ripple’s $50 million initial investment in MoneyGram.
Crypto Firms Are Delisting XRP Tokens
According to MoneyGram’s quarterly outlook, the company is not planning for any benefit from Ripple market development fees for the first quarter of 2021. MoneyGram said it had a more than $12 million net expense benefit from Ripple in the same quarter last year.
MoneyGram CEO Alex Holmes signaled that he would like to resume its partnership with Ripple:
“We’re pausing those activities just more for [an] abundance of caution…than with any other concerns about it. We’ve had a great relationship with Ripple, and it’d be great to continue to partner with them.”
Meanwhile, MoneyGram is not the only firm to distance itself from Ripple following the SEC’s lawsuit. Various cryptocurrency exchanges have already delisted or suspended the trading of the XRP token. The lawsuit initially caused XRP’s price to drop, although the token has largely recovered in two months and is currently at $0.5225 at the time of writing.