Moneygram International announced yesterday that it has halted operations on Ripple’s platform. The news came with the company’s Q4 and 2020 earnings report.
In its outlook for the first quarter of 2021, Moneygram noted that it “is not planning for any benefit from Ripple market development fees in the first quarter,” adding that “due to the uncertainty concerning their ongoing litigation with the SEC, the company has suspended trading on Ripple’s platform.”
Before now, the payment solution company had a commercial agreement with Ripple, enacted in June 2019, to “use Ripple’s foreign exchange (FX) blockchain trading platform (ODL) for the purchase or sale of four currencies.”
In its earnings report on Monday, Moneygram explained that “in the first quarter of 2020, the company realized a net expense benefit of $12.1 million from Ripple market development fees.” The company also noted that in Q4 of 2020, it generated “$8.5 million net benefits from Ripple market development fees of $9.2 million, partially offset by related transaction and trading expenses of $0.7 million.”
Furthermore, its financial statement for the years 2020 and 2019 include Ripple market development fees of $50.2 million and $11.3 million, respectively. These numbers were counteracted by related transaction and trading expenses of $11.9 million and $0.4 million, respectively.
SEC’s Lawsuit Against Ripple
Moneygram cited the recent SEC lawsuit against Ripple Labs Inc. as the reason for its tie-severing move.
The SEC lawsuit, which got filed in December 2020, charges Ripple’s CEO and co-founder with conducting a $1.3 billion unregistered securities offering of XRP.
The lawsuit alleges that “much of the onboarding onto ODL was not organic or market-driven. Rather, it got subsidized by Ripple.” The SEC added that “though Ripple touts ODL as a cheaper alternative to traditional payment rails, at least one money transmitter … found it to be much more expensive and therefore not a product it wished to use without significant compensation from Ripple.”
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