By
Steve Muchoki
April 19th, 2024
Despite its efforts to resist being affected by Ripple’s crisis, MoneyGram might have a few tough months ahead.
MoneyGram International Inc (NASDAQ: MGI) has been sued by investors who purchased MoneyGram securities between June 17, 2019 and February 22, 2021. The lawsuit, filed on Monday, 1 March, alleges that MoneyGram made false statements regarding Ripple Labs and XRP.
The Class Action lawsuit was filed by Rosen Law Firm, a global investor rights law firm. The lawsuit is another one in a series of the SEC‘s December lawsuits against Ripple Labs for the alleged sale of unlicensed securities.
The suit alleges that during the class period, MoneyGram made misleading statements and/or failed to reveal that:
“1) XRP, the cryptocurrency that MoneyGram was utilizing as part of its Ripple partnership, was viewed as an unregistered and therefore unlawful security by the SEC;
(2) in the event that the SEC decided to enforce the securities laws against Ripple, MoneyGram would be likely to lose the lucrative stream of market development fees that was critical to its financial results throughout the Class Period; and
(3) as a result, defendants’ public statements were materially false and/or misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.”
On June 17, 2019, MoneyGram announced a “strategic” partnership with Ripple that would permit MoneyGram to use Ripple’s xRapid (later called On-Demand-Liquidity or ODL) product for its cross-border payments. The ODL service leveraged XRP in foreign exchange settlement in an attempt by the two companies to increase the efficiency and reduce the cost of cross-border transactions.
On 23 December, a day after the SEC announced that it had filed a lawsuit against Ripple Labs and two execs, MoneyGram explained that it did not depend on ODL for its foreign exchange trading.
Part of the statement read:
“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.”
Further, in its 22 February Q1 ’21 Outlook, MoneyGram, disclosed that it was suspending trading on Ripple’s network citing the uncertain outcome of the latter’s legal woes.
Despite these moves to resist being affected by Ripple’s crisis, MoneyGram might have a few tough months ahead. Rosen Law Firm is calling on all who may have purchased MoneyGram securities during the class period of June 17, 2019, to February 22, 2021, to come forward by April 30, 2021, if they wish to serve as lead plaintiff in the case.