Moneygram announced that it has suspended the use of the Ripple platform due to the US Securities and Exchange Commission (SEC) lawsuit against Ripple Labs and its executives. Last year, the company earned $50.2 million in revenue from Ripple by using the platform.
Moneygram stops using Ripple’s platform
Moneygram International announced on Monday that it has suspended trading on the Ripple platform. The announcement is part of the company’s fourth quarter and full-year 2020 earnings report. Moneygram’s total revenue in 2020 is $1.217 billion. Its remittance income was $1.105 billion.
As part of the outlook for the first quarter of 2021 detailed in the report, Moneygram wrote: “It does not intend to receive any revenue from Ripple market development fees in the first quarter,” adding:
The company has suspended trading on the Ripple platform due to uncertainty that they are in a lawsuit with the SEC.
How much ripples pay
Since June 2019, Moneygram has reached a commercial agreement with Ripple to “use Ripple’s foreign exchange (FX) blockchain trading platform (ODL) to buy or sell four currencies,” the company explained . The platform utilizes XRP cryptocurrency. Moneygram’s use of it is funded by Ripple.
On Monday, Moneygram revealed in its earnings release: “In the first quarter of 2020, the company received a net fee income of US$12.1 million from Ripple’s market development fees.” In the fourth quarter, it received “$9.2 million Ripple The currency market development fee generated a net income of US$8.5 million, which was partially offset by related transaction and transaction costs of US$700,000.”
At the same time, its 2020 and 2019 financial statements include Ripple market development fees of US$50.2 million and US$11.3 million, respectively. These figures were partially offset by related transaction and transaction costs of US$11.9 million and US$400,000, respectively.
Moneygram cited the SEC lawsuit as the reason for suspending the use of the Ripple platform
The SEC filed a lawsuit against Ripple Labs Inc., its CEO Brad Garlinghouse, and co-founder Christian Larsen in December, accusing them of conducting a $1.3 billion unregistered securities offering of XRP cryptocurrency.
The SEC lawsuit stated that “Most of ODL’s onboarding is not organic or market-driven. It is subsidized by Ripple.” The regulator further described: “Although Ripple touts ODL as a cheaper alternative to the traditional payment track , But at least one money transfer company…found it was more expensive, so without Ripple’s significant compensation, it’s not the product you want to use.”
The US Securities and Exchange Commission did not specify the name of the remitter. “The remitter has achieved the main purpose of Ripple in exchange for considerable economic compensation,” and added:
The sender of funds has become another channel for Ripple to enter the market for unregistered XRP sales. Ripple has gained an additional benefit, that is, it can advertise the “use” of its inorganic XRP and XRP trading volume.
What is your opinion on Moneygram’s decision to stop using the Ripple platform? Let us know in the comments section below.
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