Ripple and Moneygram stop their partnership due to SEC’s lawsuit
Ripple Labs isn’t having a great time since the U.S. Securities and Exchange Commission (SEC) issued a lawsuit against them last December. From that date, numerous exchanges and other crypto-companies (like funds) have decided to stop their XRP trading. Now is the turn for another one: Ripple and Moneygram, one of the world’s largest money transfer companies, have just stopped their alliance.
They both entered into a “strategic partnership” back in 2019. This with the main purpose “to instantly settle funds from US dollars to destination currencies on a 24/7 basis”. However, barely a day after the lawsuit against Ripple went public, Moneygram published a press release for distancing itself from the problem, and even saying they didn’t use the Ripple products that much.
“As a reminder, MoneyGram does not utilize the ODL platform or RippleNet for direct transfers of consumer funds — digital or otherwise. Furthermore, MoneyGram is not a party to the SEC action.”
Now, on their last Financial Report, they announced -amid everything else- that they suspended their trading on Ripple’s platform. Their partnership is, in the best of the cases, on hold, due to the legal uncertainty currently faced by Ripple.
“The Company [Moneygram] is not planning for any benefit from Ripple market development fees in the first quarter. Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple’s platform. In the first quarter of 2020, the Company realized a net expense benefit of $12.1 million from Ripple market development fees.”
This might be bad news for XRP, but, surprisingly, the price hasn’t suffered that much so far. On the contrary, it had a weekly increase of over 31%, and there’s an explanation for this.
Moneygram and Ripple break, but Wyoming is waiting
Brad Garlinghouse had stated before that they were considering abandoning the United States in favor of some crypto-friendlier territory. Nevertheless, it seems that they changed their minds a bit because they decided to register a new entity for Ripple Labs in the Wyoming state.
This is explained because Wyoming is a crypto-friendly jurisdiction, that recognizes cryptocurrencies as property since 2019. Caitlin Long, CEO at Avanti (a crypto-oriented financial institution), announced the register via Twitter.
Besides the new entity, today was the first court date for Ripple Labs and SEC. During the meeting, the lawyer Matthew Solomon, who represents Ripple CEO Brad Garlinghouse, stated that SEC failed to warn earlier the companies and investors about the supposed status of XRP as a security. Like he said, “as this case moves forward, these facts will come to light, and it will be clear that XRP cannot establish and will not establish that XRP is a security”.
SEC is preparing their defense, while both parties published a letter last week where the hopes of a settlement are far thin. The discovery phase of litigation (accumulation of evidence) is expected to end no earlier than Aug. 16, 2021.
Featured Image by Andrea Piacquadio / Pexels