MoneyGram Hit With Class Action Lawsuit over Ripple Partnership
Popular payments firm MoneyGram has been sued with a class action over allegations of misrepresentation in its partnership deal with Ripple Labs as well as the legal standing of XRP token.
The class-action suit comes following the statement that MoneyGram International provided following a partnership deal with fintech startup Ripple Labs which also involved XRP token.
Rosen Law Firm filed the class action suit representing MoneyGram’s shareholders that bought their stock from June 17, 2019, to February 22, 2021. The law firm located in New York states that MoneyGram provided false information to investors regarding their agreement with Ripple Labs, specifically the legal standing of XRP token.
According to the court documents, the US Securities and Exchange Commission (SEC) has said that XRP is an unregistered security over the last couple of years. Therefore, if the securities regulator decides to take action against Ripple, MoneyGram International will lose a highly lucrative revenue stream in terms of market development fees. This, the lawyers present is vital to the payments firm’s financial results and position.
The court filings also present that Ripple offered $38 million to MoneyGram in 2020 as market development fees which translated to 15% of its earnings. The law firm also claims that its clients suffered damages after the agreement's real details became public.
MoneyGram International inked a strategic deal with Ripple Labs in June 2019. The deal involved Ripple committing to remit about $50 million to the payments company. After the deal's signing, MoneyGram became a member of Ripple’s international payment network dubbed xRapid that was later renamed as On-Demand Liquidity (ODL) which utilizes XRP token for international payments.
At the end of last year, and after the SEC accused Ripple of raising $1,3 billion by offering an unregistered security, Ripple held approximately 17% of MoneyGram’s available shares.
MoneyGram released statements stating that the case filed against Ripple was unlikely to affect the partnership deal negatively. However, last month, MoneyGram suspended its partnership deal with Ripple Labs.