Publicly-traded remittance firm MoneyGram announced Monday that it suspended its use of Ripple’s payments solution in light of the distributed ledger company’s ongoing legal fight with the U.S. Securities and Exchange Commission (SEC).
“Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple’s platform,” said Nasdaq-listed MoneyGram. The Ripple-MoneyGram partnership began in June 2019 and was scheduled to expire in July 2023.
By using Ripple’s payments solution, RippleNet, MoneyGram was leveraging XRP in forex settlements as part of its cross-border payments process. Ripple had provided incentives to MoneyGram for doing that and the remittance company previously categorized these payouts as “market development fees” rather than revenue.
In the fourth quarter of 2020, Ripple provided MoneyGram with $8.5 million worth of incentives. Now that its use of Ripple’s platform has been suspended, MoneyGram is “not planning for any benefit from Ripple market development fees in the first quarter.”
Over the last two years, in 2020 and 2019, Ripple paid $50.2 million and $11.3 million, respectively, to MoneyGram. This was in addition to Ripple’s $50 million initial investment in MoneyGram.
In a statement after the publication of this story, Ripple said the MoneyGram suspension is temporary. “We signed a multi-year contract in 2019 with MoneyGram, which is still in place and is not limited to their use of ODL [on-demand liquidity solution within RippleNet that utilizes XRP]. Together we are actively leveraging and exploring alternative use cases,” said MoneyGram, adding:
“We look forward to finding a path forward with MoneyGram and have confidence that there will be more regulatory clarity in the U.S. for the use of digital assets and blockchain technology at the end of this lawsuit.”
Since the SEC filed a lawsuit against Ripple and its executives over alleged unregistered securities sales of XRP, a number of firms in the crypto space have paused or ceased entirely activities related to XRP.