MoneyGram has suspended trading on Ripple’s platform over concerns about the latter’s litigation with the Securities and Exchange Commission.
Ripple has effectively been paying MoneyGram to use its on-demand liquidity service, with the money transfer outfit seeing a “net expense benefit” of $12.1 million from Ripple market development fees in the first quarter of 2020.
However, late last year the SEC filed a regulatory lawsuit against Ripple Labs Inc. and two of its executives, alleging that they “raised over $1.3 billion through an unregistered, ongoing digital asset securities offering”.
The complaint mentions the MoneyGram arrangement, although not the company by name, saying: “The Money Transmitter became yet another conduit for Ripple’s unregistered XRP sales into the market, with Ripple receiving the added benefit that it could tout its inorganic XRP ‘use’ and trading volume for XRP.”
Reporting its fourth quarter results, MoneyGram now says: “[T]he Company is not planning for any benefit from Ripple market development fees in the first quarter. Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple’s platform.”
In a statement to Finextra, Ripple says it continues to work with Moneygram to explore new use cases beyond ODL.
“We look forward to finding a path forward with MoneyGram and have confidence that there will be more regulatory clarity in the US for the use of digital assets and blockchain technology at the end of this lawsuit – both of which MoneyGram has commented on publicly in the past about the benefits they have witnessed firsthand for their business.
“As we’ve said before, the lawsuit against Ripple has needlessly muddied the waters and introduced more uncertainty in the market for exchanges, market makers, traders and businesses who want to employ this technology. As a result, some US market participants are reacting conservatively.”