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MoneyGram faces lawsuit over Ripple partnership

The international payment company MoneyGram has been sued with a class-action lawsuit on March 1, 2021 in California. It claims the company made false and/or misleading statements in regards to its partnership with Ripple and the security of XRP cryptocurrency.

In a press release issued by Rosen Law Firm, it is a class-action lawsuit filed on behalf of the investors who bought MoneyGram securities between June 17, 2019 and February 22, 2021.

The law firm asserted that MoneyGram made fraudulent statements regarding the security of XRP cryptocurrency which they have been using since 2019. Moreover, they encourage those who invested within the stated time frame to join them on the MoneyGram class action lawsuit if they want the case to move.

‘If you wish to serve as a lead plaintiff, you must move the Court no later than April 30, 2021,’ as said in the Class Action Case posted in Rosen Law Firm’s website.

According to the lawsuit filed by Rosen Law Firm, MoneyGram made false and/or misleading statements throughout the Class Period and failed to disclose the following:

  1. XRP, the cryptocurrency that MoneyGram was utilizing as a 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;
  3. and as a result, defendants’ public statements were materially false and/or misleading at all relevant times.

In December 2019, SEC sued Ripple over the alleged violations of federal securities laws. It is stated that Ripple’s CEO Brad Garlinghouse and Chairman Chris Larsen sold over $1 billion in XRP to investors without registering the cryptocurrency to SEC as a security.

The SEC informed the judge in a letter that they are seeking to take five depositions beyond the ten normally allowed.

However, Ripple refused to comply stating that the documents fall under attorney-client privilege. The company even stated that the SEC’s request is ‘improper and lacks legal foundation’.

Laurence Rosen, an attorney and co-founder of Rosenlaw & Einschlag which is a Technology Law Office, stated in his Class Action post, ‘In the event that the SEC decided to enforce the security laws against Ripple, MoneyGram would likely lose the lucrative stream of market development fees that was critical to its financial results throughout the Class Period.’

Ripple has been in partnership with MoneyGram and was paying the international payment company for using their platform since 2019.

MoneyGram has reaped over $61.5 million in its market development fees ever since the partnership was established.

After the release of the lawsuit, Larry Angelilli, MoneyGram’s Chief Financial Officer, stated that the company is faced with logistical challenges in using the platform, as well as legal and reputational risks.

As of now, MoneyGram is working with Ripple to figure out possible alternatives for their partnership.

‘If there’s a resolution to the case, especially if Ripple prevails, then I would say there would be no problem,’ stated MoneyGram CFO Angelilli.

Meanwhile, Ripple released a public statement that is seeking to find a path forward with MoneyGram. Additionally, they’re confident the lawsuit will provide more clarity on the regulatory treatment of blockchain technology and digital assets in the US.

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