The money transfer firm MoneyGram is facing a class action lawsuit claiming that the company made false and/or misleading statements about its partnership with American blockchain company Ripple and the legal status of the XRP token.
Per a press release by Rosen Law Firm, the suit has already been filed, and on behalf of purchasers of the securities of MoneyGram between June 17, 2019 and February 22, 2021.
According to the lawsuit, in this period, defendants made false and/or misleading statements and/or failed to disclose that:
- “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 US Securities and Exchange Commission (SEC);
- 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;
- 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.”
The law firm claims that those who purchased “MoneyGram securities during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.”
A lead plaintiff is yet to be chosen.
MoneyGram and Ripple became partners, after the latter made a USD 30m initial investment in MoneyGram equity in June 2019. However, Ripple found itself in a long battle with the SEC over XRP, as the regulator claims that XRP is an unregistered security, which Ripple disputes.
MoneyGram recently claimed that its support for Ripple stayed in place, but still announced that it would suspend the receipt of “market development fees.” Alex Holmes, the MoneyGram CEO, said at the time that they are “definitely supportive of Ripple’s efforts, but at the same time, we have to do what is right for the organization.”
In 2020, MoneyGram received USD 38m in net market development fees from Ripple in 2020, representing about 15% of the company’s adjusted earnings before interest, taxes, depreciation, and amortization. The company said it also faced logistical challenges in using the platform, as well as legal and reputational risks, following the lawsuit against Ripple.
XRP is (at 14:01 UTC) trading at USD 0.44. It increased 2.7% in a day and decreased 5.8% in a week.
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