- Lawsuit filed against MoneyGram for libel
- Payment firm to lose a great deal if XRP is prosecuted
Global payment firm MoneyGram has been dragged to court for libel against its partner, Ripple. MoneyGram allegedly published a false statement about Ripple regarding the embattled XRP cryptocurrency.
The class-action lawsuit filed March 1 in California was submitted on behalf of investors who purchased securities from MoneyGram between June 17, 2019, and February 22, 2021.
The investors claim that MoneyGram made fraudulent statements regarding its partnership with Ripple Labs and the status of XRP as a security. Referring to the post announcing the partnership between MoneyGram and Ripple in 2019, the firm also utilized Ripple’s xRapid product, “leveraging XRP in foreign exchange” settlements as part of its cross-border payment process.
The global payment firm later in December 2020 claimed it is not dependent on Ripple’s xRapid service for its foreign exchange trading needs which was rebranded to On-Demand-Liquidity or ODL in 2019, going against its previous claim. This prompted the lawsuit.
MoneyGram suspends Ripple partnership
The global payment firm suspended its partnership with ripple weeks back after the Security and Exchange Commission (SEC) dragged Ripple to court alleging security violation in Dec 2020. SEC said XRP was security and not an asset which Ripple claimed it is.
The lawsuit filed against the payment firm also alleged that the payment firm failed to disclose that XRP was viewed as an unregistered and unlawful security by the SEC. Therefore if SEC decides to enforce securities laws against Ripple, the payment firm would likely lose the lucrative stream of market development fees that was critical to its financial result, Rosen law firm said.
This is because Ripple paid the global payment firm for making use of its platform while providing incentives to help startups expand into larger markets. According to The Wall Street Journal, the payment firm received $38 million in net market development fees from Ripple in 2020, representing about 15 percent of its adjusted earnings. If XRP is hammered, the blow would translate to a lot of loss for the payment giants.