MoneyGram puts relationship with Ripple (XRP) on hold
MoneyGram has put the partnership with Ripple on hold. Legal turmoil and the SEC investigations are the reason.
MoneyGram is stepping down from its partnership with Ripple Labs. The reason for this is the excessive legal uncertainty with regard to the XRP token and the investigations by the US Securities and Exchange Commission (SEC).
The lawsuit filed by the SEC alleges Ripple and its co-founders raised over $ 1.3 billion through unregistered digital assets
The idea behind XRP is to help banks move money more efficiently. Over the years, Ripple has partnered with institutions like de Santander Bank and Bank of America.
As part of a two-year partnership, Bitcoin Up entered into an agreement with the DLT company Ripple Labs in June 2019. Ripple agreed to invest $ 50 million in MoneyGram. In return, Ripple was able to use MoneyGram’s on-demand liquidity service (ODL service). For the use of the XRP token, Ripple Labs pays so-called market development fees to MoneyGram.
The money transfer service provider does not expect any gains from market development fees in the first quarter of 2021. In the first quarter of last year, the company earned $ 12.1 million from such fees.
These payments now appear to be on hold. At least until the legal gap between Ripple Labs and the US Securities and Exchange Commission is cleared. The agency claims that XRP is an unregistered asset and that Ripple Labs is therefore in violation of US investment law.
Ripple doesn’t give up hope
Major cryptocurrency exchanges like Coinbase and Binance have since removed XRP from the list. Leading crypto asset manager Grayscale liquidated its XRP-focused fund. XRP was the third largest cryptocurrency by market capitalization at one point in time.
MoneyGram is unable to restore its relationship with Ripple. Still, there are “two dozen” other companies offering ODL services, said RippleNet’s general manager Asheesh Birla.
Birla adds that Ripple will be “on a path forward” in re-establishing its partnership with MoneyGram. In a tweet , Birla makes it clear that MoneyGram has ended its operational collaboration with the XRP token, but that there is still a “multi-year contract” between the two companies.