Moneygram has announced that it has suspended using Rippleâ€™s platform due to the lawsuit against Ripple Labs and its executives by the U.S. Securities and Exchange Commission (SEC). Last year, the company earned $50.2 million from Ripple for using the platform.
Moneygram Stops Using Rippleâ€™s Platform
Moneygram International announced Monday that it has suspended trading on Rippleâ€™s platform. The announcement came as part of the companyâ€™s earnings report for the fourth quarter and full year 2020. For the year 2020, Moneygram recorded total revenue of $1,217 million; its money transfer revenue was $1,105 million.
As part of its first quarter 2021 outlook detailed in the report, Moneygram wrote that it â€œis not planning for any benefit from Ripple market development fees in the first quarter,â€ adding:
How Much Ripple Is Paying Moneygram
Moneygram has had a commercial agreement with Ripple since June 2019 to â€œuse Rippleâ€™s foreign exchange (FX) blockchain trading platform (ODL) for the purchase or sale of four currencies,â€ the company explained. The platform utilizes the XRP cryptocurrency. Its use by Moneygram is subsidized by Ripple.
In its earnings release Monday, Moneygram revealed that â€œIn the first quarter of 2020, the company realized a net expense benefit of $12.1 million from Ripple market development fees.â€ In the fourth quarter, it generated â€œ$8.5 million net benefit from Ripple market development fees of $9.2 million, partially offset by related transaction and trading expenses of $0.7 million.â€
Meanwhile, its financial statements for the year 2020 and 2019 include Ripple market development fees of $50.2 million and $11.3 million, respectively. These figures were partially offset by related transaction and trading expenses of $11.9 million and $0.4 million, respectively.
Moneygram Cites SEC Lawsuit as Reason for Suspending Use of Rippleâ€™s Platform
The SEC filed a lawsuit in December against Ripple Labs Inc., its CEO Brad Garlinghouse, and co-founder Christian Larsen, charging them with conducting a $1.3 billion unregistered securities offering of the XRP cryptocurrency.
The SEC lawsuit alleges that â€œMuch of the onboarding onto ODL was not organic or market-driven. Rather, it was subsidized by Ripple.â€ The regulator further described: â€œThough Ripple touts ODL as a cheaper alternative to traditional payment rails, at least one money transmitter â€¦ found it to be much more expensive and therefore not a product it wished to use without significant compensation from Ripple.â€
Without naming the money transmitter in question, the SEC detailed, â€œThe money transmitter has served that principal purpose for Ripple in exchange for significant financial compensation,â€ adding:
What do you think about Moneygramâ€™s decision to stop using Rippleâ€™s platform? Let us know in the comments section below.
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