Moneygram has announced that it will discontinue its use of the Ripple platform following a lawsuit filed by the US Securities and Exchange Commission against Ripple Labs and its executives. In the past year, Ripple made $ 50.2 million for using the platform.
Moneygram stops using the Ripple platform
Moneygram International announced on Monday that trading on the Ripple platform has ceased. The announcement was made as part of the company’s earnings report for the fourth quarter and full year 2020. For 2020, Moneygram had total revenues of $ 1,217 million. Income from money transfers was $ 1,105 million.
As part of the outlook for the first quarter of 2021 outlined in the report, Moneygram wrote that “no benefit from Ripple market development fees is planned in the first quarter,” adding:
Due to the uncertainty surrounding the ongoing litigation with the SEC, the company has stopped trading on the Ripple platform.
How much ripple does moneygram pay
Moneygram has signed a trading agreement with Ripple since June 2019 to “use Ripple’s blockchain trading platform (ODL) to buy or sell four currencies,” the company said. The platform uses the XRP cryptocurrency. Moneygram’s use is subsidized by Ripple.
In its earnings release on Monday, Moneygram announced that “the company earned a net cost advantage of $ 12.1 million from Ripple market development fees in the first quarter of 2020.” In the fourth quarter, Ripple generated net income of $ 8.5 million – Realized market development fees of $ 9.2 million, partially offset by related transaction and trading costs of $ 0.7 million.
The financial statements for 2020 and 2019 include Ripple market development fees of $ 50.2 million and $ 11.3 million, respectively. These numbers were partially offset by associated transaction and trading costs of $ 11.9 million and $ 0.4 million, respectively.
Moneygram cites the SEC lawsuit as the reason for discontinuing use of the Ripple platform
The SEC filed a lawsuit against Ripple Labs Inc., its CEO Brad Garlinghouse and co-founder Christian Larsen in December, accusing them of making an unregistered $ 1.3 billion securities offer for the XRP cryptocurrency.
The SEC lawsuit alleges that “much of the onboarding on ODL was not organic or market-driven. Rather, it was subsidized by Ripple. The regulator went on to describe: “Although Ripple is touting ODL as a cheaper alternative to traditional payment channels, at least one money transmitter found that it was much more expensive and therefore not a product it would want to use without significant compensation from Ripple.”
Without naming the money transmitter in question, the SEC stated, “The money transmitter served this primary purpose for Ripple in exchange for substantial financial compensation,” adding:
The money transmitter became another channel for Ripple’s unregistered XRP sales in the market, with Ripple getting the added benefit of being able to advertise its inorganic XRP usage and trading volume for XRP.
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