MoneyGram has been sued by the Rosen law firm over securities fraud in a class-action lawsuit. The firm’s initial disclosure relates the lawsuit to MoneyGram’s failure to disclose the XRP cryptocurrency holdings, allegedly unlawful and unregistered security, being utilized as a part of its Ripple partnership.
Rosen Law Firm Files Class Action Lawsuit Against Moneygram Over Securities Fraud
This non-disclosure has caused billions of damages to investors. It also alleges that MoneyGram has intentionally misled or provided false information to its investors. And if the SEC wins the case against Ripple, MoneyGram loses the market development fees, which boosts its financial results.
The global investor’s rights-focused law firm has encouraged all investor’s affected by MoneyGram’s action and have sustained losses of over $100K to seek urgent counsel with the firm. According to the press release, the investors must come forward no later than Apr 30.
This also includes investors who purchased MoneyGram International, Inc securities between June 17, 2019, and February 22, 2021, which is the time frame of the MoneyGram-Ripple partnership.
Background: MoneyGram – Ripple Partnership
MoneyGram entered into a partnership with Ripple in June 2019, receiving an investment of $30M. This investment allowed them to use Ripple’s xRapid product for remittances and utilizing XRP tokens for cross-border settlements. Ripple also acquired a stake in the company, later exiting from 33% of its MoneyGram holdings.
It has also provided the payment processor with net development fees over the years. However, MoneyGram was quick to distance itself from Ripple, following the SEC’s recently filed lawsuit. They alleged that XRP is an unregistered security and accusing Ripple of misleading investors plus market manipulation for unlawful gains.
The payment processor was able to clarify it’s position regarding the xRapid product and RippleNet, confirming that it doesn’t utilize the said platforms for any kinds of fund transfers. Hence, it shouldn’t be included in the ongoing litigation by the SEC. It recently suspended the trading on Ripple’s platform as well.
What if the SEC Rules Against Ripple?
If the SEC wins the case against Ripple, the chances are that MoneyGram might be dragged into the lawsuit, which would incur losses for the company. Due to the regulatory uncertainty and pressure, its MoneyGram could soon lose the income stream from Ripple.
The investors would therefore lose money, because of the MoneyGram allegedly misleading and unlawful actions.