Ripple's partner MoneyGram is facing a lawsuit alleging the company made misleading statements and did not disclose XRP's status as unlicensed securities.
Class action, filed March 1 in California, was filed on behalf of investors who purchased securities from MoneyGram between June 3, 17 and February 6, 2019. .
The global investor rights regulator asserted MoneyGram made false statements regarding their partnership with Ripple Labs and the status of XRP as a security.
According to a post announcing a "strategic partnership" between the two companies in June 6, MoneyGram used Ripple's xRapid product, "leveraging XRP payments in foreign exchange" as part of the cross-border payment process.
However, on December 23, 12, the company made it clear that it is not dependent on Ripple's xRapid service for its forex trading needs - the service has been renamed Liquid on Demand. demand (ODL) in 2020:
MoneyGram does not use the ODL or RippleNet platforms to directly transfer consumer funds. Furthermore, MoneyGram is not a party to the SEC's lawsuit
MoneyGram suspended its partnership with Ripple at the end of February after the US Securities and Exchange Commission filed a complaint against Ripple Labs with alleged securities breaches in December 2.
The defendants alleged that MoneyGram did not disclose that XRP was viewed by the SEC as an unregistered and illegal security.
Additionally, in the event that the SEC decides to enforce securities laws against Ripple, MoneyGram would likely lose the lucrative flow of market development fees that were so crucial to its financial performance, they added:
As a result, the defendant's public statements are seriously false and / or misleading at the relevant times. When the details actually entered the market, the lawsuit showed the investors to be the loser
Ripple has paid MoneyGram to use its platform while providing financial incentives to help the startup expand into new markets.
The Wall Street Journal reported that MoneyGram received $ 38 million in net market development fees from Ripple in 2020, accounting for about 15% of the company's adjusted earnings.
The agreement between the two companies expires in 2023, with Ripple also having agreed to invest up to $ 50 million in MoneyGram.