MoneyGram and Ripple end partnership deal two years early
MoneyGram and Ripple have ended their partnership agreement amid a flurry of regulatory intervention and litigation.
MoneyGram is facing a lawsuit over its Ripple partnership
The payments and exchange firm has used Ripple’s xRapid system – now called On-Demand Liquidity (ODL) – since 2018, and the pair announced a strategic partnership in June 2019. The original deal was to expire in 2023.
February saw the partnership suspended, when the US Securities and Exchange Commission (SEC) filed a complaint against Ripple Labs.
The US watchdog accuses Ripple of securities violations in December 2020. It claims some sales of Ripple’s cryptocurrency XRP were not registered, or didn’t apply to exemption rules.
In the complaint, the SEC claims a partner and “money transmitter” has become “a conduit for Ripple’s unregistered XRP sales into the market”.
MoneyGram is suffering its own bought of litigation. The firm is being sued by law firm Rosen on behalf of investors for allegedly untrue statements made about its partnership with Ripple.
When the two firms announced their June 2019 deal, MoneyGram said it used ODL to leverage XRP in foreign exchange.
The company issued a new statement in December 2020 that it was not dependant on the system.
“MoneyGram does not utilise the ODL platform or RippleNet for direct transfers of consumer funds,” it wrote, “digital or otherwise.”
“Muddied waters”
The partnership between the two firms has come under scrutiny for financial contributions Ripple has made towards MoneyGram.
The Wall Street Journal reported a $38 million market development fee paid by Ripple to MoneyGram in 2020. The figure accounted for around 15% of the latter’s adjusted earnings.
Ripple had also agreed to invest up to $50 million in MoneyGram by the expiration of their partnership deal.
Ripple CEO, Brad Garlinghouse, issued a statement on Twitter this week about the closing of the deal. In it, he claims the two firms processed billions of dollars through ODL and RippleNet.
Garlinghouse levels blame at regulators for a “lack of crypto reg framework” which has “needlessly muddied the waters for US businesses and customers”.
He adds: “There’s no denying what Ripple and [MoneyGram] have achieved together.” Ripple and MoneyGram plan to revisit their relationship in the future.
Related: Western Union reportedly makes acquisition bid for MoneyGram
