Publicly-listed remittance company MoneyGram is facing a class-action lawsuit for alleged misrepresentation of the controversial XRP token. The lawsuit has been filed by Rosen Law Firm, a global investor rights law firm, on behalf of purchasers of the securities from MoneyGram International between June 17, 2019, and February 22, 2021.
Rosen Law Firm Files Lawsuit Against MoneyGram Over XRP
MoneyGram International has been sued over false statements that the payments company made regarding its partnership with Ripple Labs and the status of XRP as a security.
In its latest filings, revealed to the SEC, MoneyGram revealed that it was paid by Ripple since 2019. The intention behind this was to incentivize MoneyGram to utilize the XRP fueled On-Demand Liquidity (ODL) system. The payment was made in the form of XRP tokens.
Ripple had paid roughly $38 million to MoneyGram last year in the form of development fees. Overall, the fees represent roughly 15% of MoneyGram’s adjusted earnings.
The agreement between the two companies was due to expire in 2023, with Ripple also has agreed to invest up to $50 million in MoneyGram.
However, in late February, following the U.S. SEC lawsuit against Ripple Labs, MoneyGram suspended its partnership with Ripple due to the ongoing litigation and concerns of the regulatory uncertainty:
“Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple’s platform.”
MoneyGram Failed to Disclose XRP as Unregistered Security
The lead plaintiff of the class-action lawsuit, Rosen Law Firm alleged that MoneyGram failed to disclose that XRP could be viewed as an unregistered and unlawful security by the SEC.
Hence, if the court orders against Ripple, the remittance company would lose a significant stream of its market development fees that was significant in its financial result:
“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.”