MoneyGram announced that it has ceased trading on the Ripple platform due to the company’s ongoing litigation with the US Securities and Exchange Commission.
Global money transfer service MoneyGram announced that it had ended its relationship with blockchain payment firm Ripple (XRP), citing Ripple’s ongoing lawsuit with the SEC. Therefore, MoneyGram will not use XRP to process international settlements until the lawsuit is resolved by the SEC.
In its quarterly forecast report, MoneyGram said that given the current situation, it doesn’t expect to benefit from Ripple in the current quarter. The company wrote: “In addition, the company does not plan to benefit from the Ripple market development fees in the first quarter.”
Ripple and some of its executives are facing lawsuits from the Securities and Exchange Commission over the issue and sale of securities in the form of XRP tokens. According to the SEC, the blockchain payment company issued unregistered securities and sold them to the general public.
MoneyGram added that “Due to the uncertainty surrounding the ongoing litigation with the SEC, the company has stopped trading on the Ripple platform. In the first quarter of 2020, the company earned a net cost benefit of $ 12.1 million from Ripple market development fees. “
Ripple’s suspension at MoneyGram is likely to impact profits for the global money transfer company in the first quarter. The company said: “Based on the combination of these factors, the company expects adjusted EBITDA to be approximately $ 50 million in the first quarter of 2021.”
The collaboration between Ripple Labs and MoneyGram began three years ago when the money transfer company integrated XRP into its payment system. Ripple and MoneyGram partnered a year later. As part of the partnership, the two companies worked on cross-border payments and foreign exchange settlements using digital assets.
Ripple strengthened the partnership with a $ 50 million investment in November 2019 and gave them a 10% stake in MoneyGram. However, Ripple later sold $ 15 million of its shares in MoneyGram in December 2020.
MoneyGram isn’t the only financial institution responding to Ripple’s ongoing problems with the SEC. Several cryptocurrency exchanges have suspended XRP trading or removed the coin from their platforms. Although the lawsuit initially caused the price of XRP to drop, the coin has largely rebounded in recent months and is trading above $ 0.5 on most exchanges.