The money transfer firm MoneyGram claims its support for Ripple is still in place, despite an announcement that it will suspend the receipt of “market development fees” – but the two companies endured a bitter fate on the stock market, with the former’s stocks (many of which are Ripple-owned) taking a plunge.
Ripple began paying MoneyGram the fees as part of an agreement to use Ripple’s under-fire XRP token in international settlements deals. However, it appears that the payments firm has been spooked by the ongoing legal showdown between Ripple and the American regulatory Securities and Exchange Commission (SEC). The SEC claims that XRP is an unregistered security, a claim that Ripple bitterly disputes.
But MoneyGram conceded, during a FY2020 Q4 earnings call, transcribed by The Motley Fool, that it was “not planning for any benefit from Ripple market development fees in the first quarter” of the new financial year, “due to the uncertainty concerning their ongoing litigation with the SEC,” adding that it had “suspended trading on Ripple’s platform.”
The firm conceded that it would make a financial loss as a result, stating that “in the first quarter of 2020,” it “realized a net expense benefit of USD 12.1 million from Ripple market development fees.”
It also confirmed the news in an official release, where it noted that the SEC’s move had forced its hand.
Stocks plunged on the news, as MoneyGram also unveiled lower earnings than previously forecast. On the Nasdaq market, where MoneyGram is listed, shares in the money transfer company fell by over 22%, per exchange data.
Ripple last year raised eyebrows when it sold USD 15m worth of its stock in the company, some 18 months after investing around USD 50m in MoneyGram.
Regardless, Alex Holmes, the MoneyGram CEO, stated during the call that Ripple still had his firm’s “support.”
He claimed that “we’ve had a great relationship with Ripple, and it would be great to continue to partner with them. I think what they're trying to do is definitely unique.”
“I think they have a good team over there, and they're definitely pushing for changing the payment landscape, which is extremely admirable and something that we would be [excited] to participate in.”
But, he noted, MoneyGram was keen to avoid any further run-ins with “government regulators in a number of countries,” adding that “when that stuff happens, it’s not any fun.”
“We’re definitely supportive of Ripple’s efforts, but at the same time, we have to do what is right for the organization.”
At the time of writing (09:22 UTC), XRP, ranked 7th by market capitalization, trades at USD 0.406 and is down by 31% in a day and 27% in a week, trimming its monthly gains to almost 48%. Learn more: Fact-checking Ripple’s Claim that ‘Many G20 Gov’ts’ Call XRP a ‘Currency’ MoneyGram's Success Depends on Ripple's Success - CEO What SEC Crackdown? Japanese Giant SBI Starts Offering XRP Lending XRP Pumpers Hope For More Action; Cardano's Hoskinson Warns of Pump&Dumps XRP Drops Despite Positive Report, A Lawsuit Over USD 50 Loss Emerges