- Moneygram made it clear that it doesn’t completely depend on Ripple’s xRapid service for its forex trading needs. It was renamed to On-Demand Liquidity, or ODL, in 2019
- MoneyGram terminated its partnership with Ripple in February after the US Securities and Exchange Commission filed a complaint against Ripple Labs and suspended the XRP currency for violating the securities in December 2020
What prompted Moneygram to take legal action?
MoneyGram, a Ripple partner, has been brought to justice by investors. They said the company made misleading statements about its partnership with Ripple Labs and the status of the XRP cryptocurrency.
Investors will file the lawsuit in California on March 1, 2021. Investors bought MoneyGram on June 17, 2019 and February 22, 2021. MoneyGram’s fraudulent claims about its partnership status with Ripple Labs and that XRP is not a legal security currency.
MoneyGram used Ripple’s xRapid product to benefit from XRP in forex. According to the post on Ripple and MoneyGram’s strategic partnership in June 2019, the company has used Ripple currency as an investment for the future. They used it as a back-up for the cross-border payment process.
Following these allegations made by investors, the company announced in its statement that the company clarified on December 23, 2020 that it is not entirely dependent on Ripple’s xRapid service for its forex trading needs. It was renamed to On-Demand Liquidity, or ODL, in 2019.
Clarifying its position to investors, the company said the company had not used the ODL platform or the Ripple network to channel digital or other consumer money. In addition, the company is not involved in the SEC action.
MoneyGram reportedly terminated its partnership with Ripple in February after the US Securities and Exchange Commission filed a complaint against Ripple Labs and suspended the XRP currency for violating securities in December 2020.
The conflict of interest between investors
Investors said MoneyGram did not disclose that XRP is not registered and that the SEC has placed unlawful collateral. The SEC filed a lawsuit against Ripple and decided to institute security laws against Ripple. Hence, MoneyGram is likely to lose market share in all of these moves, market development fees that were vital to its financial results.
Rosen said the defendants’ testimony was false or misleading at relevant times. When the details circulated in the market, the lawsuit alleged that investors suffered damage.
Ripple hired MoneyGram to use its platform and provided financial support for growth in new markets. According to reports in the Wall Street Journal, MoneyGram charged Ripple net market development fees of $ 38 million in 2020. It had adjusted around 15% of the company’s earnings.
The agreement between the two companies should expire in 2023. The San Francisco company has also invested approximately $ 50 million in MoneyGram.
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