Image credit: source

MoneyGram said on Feb. 22 that it has suspended use of international payments firm Ripple’s On-Demand Liquidity service.

In it’s Q4 and full year financial results released today MoneyGram International revealed that it has suspended trading in XRP due to uncertainty over the Securities and Exchange Commission’s lawsuit. The agency has said XRP is an unregistered security illegally sold by Ripple over the past eight years.

Many U.S. exchanges suspended trading in XRP due to the lawsuit. However, Ripple executives have pointed out that the vast majority of XRP transaction take place outside the U.S.

In that lawsuit, filed on Dec. 22—the day before Chairman Jay Clayton resigned as chairman of the agency—the SEC seeks to claw back some $1.3 billion that Ripple and two top executives made selling XRP over that period.

While the lawsuit caused XRP’s price to collapse, it soon rebounded, and currently trades at slightly more than it did when the SEC lawsuit was announced.

Ripple’s position was defended by former SEC chairwoman Mary Jo White in an interview with Fortune on Friday. “There’s no way to sugarcoat it. They’re dead wrong legally and factually,” said White, who now represents Ripple. She joins former Commodity Futures Trading Commission head Chris Giancarlo, who also argued XRP is not a security after his law firm began representing Ripple.

As for MoneyGram, it said it has suspended use of the Ripple’s ODL—but not it’s RippleNet product.

“[T]he Company is not planning for any benefit from Ripple market development fees in the first quarter,” MoneyGram said. “Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple’s platform.”

Ripple commented: “We signed a multi-year contract in 2019 with MoneyGram, which is still in place and not limited to their use of ODL. Together we are actively leveraging and exploring alternative use cases.”

MoneyGram’s business was a big publicity coup for Ripple, as it brought a big name in the international payments business to the network. But Ripple has been paying MoneyGram substantial market development fees to bring it onboard. 

MoneyGram said it made a net profit of $8.5 million on fees of $9.2 million in Q4 2020. It reported $11.3 million in  market development fees from Ripple in 2019, and $50.2 million in 2020.

Announced on June 17 on 2019, the deal gave Ripple a high-profile partner using its RippleNet money transfer solution, which allows users to transfer money across borders in seconds and for pennies, as oppose to days at a cost of 5% to 7%—in some cases higher—per transactions. That amounts to a $10 to $14 fee on a migrant worker sending home a $200 remittance. The United Nations has sought to reduce that to 3%—a goal far exceeded by RippleNet.

Updated Feb. 23, 2021 to correct that MoneyGram is still using RippleNet, but not ODL.

(Excerpt) Read more Here | 2021-02-22 16:32:50

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.