Payments company MoneyGram International is being sued over allegedly false statements regarding its partnership with Ripple Labs and their XRP cryptocurrency. The class-action lawsuit was filed on March 1 in California. It was submitted on behalf of investors who purchased securities from MoneyGram between June 17, 2019, and February 22, 2021. The global investor rights legal practice asserts MoneyGram made fraudulent statements regarding its partnership with Ripple Labs and the status of XRP as a security.
MoneyGram utilized Ripple’s xRapid product.
According to the “strategic partnership” between the two companies, announced in June 2019, the payment firm utilized Ripple’s xRapid product, “leveraging XRP in foreign exchange” settlements as part of its cross-border payment process. However, later last year, the payment company clarified that it is not dependent on Ripple’s xRapid service for its foreign exchange trading needs — which was rebranded to On-Demand-Liquidity or ODL. “The payment firm does not utilize the ODL platform or RippleNet for direct transfers of consumer funds – digital or otherwise. Furthermore, MoneyGram is not a party to the SEC action,” the company clarified.
MoneyGram suspended its relationship with Ripple Labs over the SEC lawsuit.
The US-based money transfer company announced that it had suspended its relationship with Ripple Labs, citing the legal uncertainty surrounding the company. In its latest earnings report, the money transfer firm said it would no longer be using Ripple’s XRP remittance solution until the payments firm sorts out its legal issues with the U.S. Securities and Exchange Commission (SEC). MoneyGram partnered with Ripple in January 2018, becoming one of the first payments service providers to pilot Ripple’s xRapid solution. In Q4 2020, the blockchain firm had paid MoneyGram $9.2 million for “market development fees.” Altogether, in the last two years, the money transfer company received $61.5 million from Ripple to continue using XRP.