MoneyGram Suspends ODL Partnership With Embattled Ripple Labs Over SEC’s Take on XRP
Ripple Labs seems to be losing some of its biggest clients following the SEC lawsuit. MoneyGram joins a train of retinue leaving the embattled digital asset.
MoneyGram Leaves Ripple In The Mud
Money transfer company MoneyGram has announced its intentions to discontinue partnering with embattled crypto company Ripple Labs. The publicly-traded wire transfer company said it was taking this decision due to the legal uncertainty surrounding XRP's lawsuit with the US Securities and Exchange Commission (SEC).
In a release, the company said it was not planning to receive the quarterly market development fees Ripple pays to it in Q1 2021. Even though it made $12.1 million from the crypto firm in Q1 2020.
Ripple approached MoneyGram three years ago to use their on-demand liquidity (ODL) system to facilitate cross-border payments and foreign exchange settlements with digital assets.
Ripple also made a $50 million investment in the remittance firm to cement the business partnership further, which saw it owning a 10% stake in the company. Ripple sweetened the deal with incentive packages which MoneyGram called market development fees. In Q4 2020, Ripple paid MoneyGram $8.5 million. Ripple paid a further $61.5 million between 2019 and 2020.
But the SEC lawsuit against Ripple Labs, CEO Brad Garlinghouse, and co-founder Christian Larsen has seen the Dallas-based company rethink the whole deal. Last year, MoneyGram had promised to look into the lawsuit, even though it claimed that Ripple's ODL payment integration was not really in use for its payment needs.
Called to comment on the announcement, a Ripple spokesperson said the partnership was still on-going.
MoneyGram Joins a Flurry of Companies
Moneygram is not the only company that has distanced itself from XRP since the SEC accused it of selling unregistered securities in the US.
Coinbase, OKEx, and many other large-cap crypto exchanges suspended XRP trading after the class-action lawsuit was made public.
With all the woes that surround Ripple, the blockchain firm registered as a business in Wyoming, a known crypto-friendly state. The news was first shared by Caitlin Long, the CEO of Avanti Bank and former Wyoming Blockchain Task Force member.
Wyoming is one of the few states in the U.S to classify cryptocurrencies like XRP as legal properties. Major cryptocurrency exchange Kraken operates a crypto bank in Wyoming having received a special-purpose depository institution (SPDI) charter to operate last year.