Investor Sues MoneyGram for Falsely Representing XRP

MoneyGram International, a publicly-listed remittance company, is facing a class-action lawsuit for alleged misrepresentation of its partnership with Ripple and XRP token.

According to a Cointelegraph report, the lead plaintiff of the lawsuit, which was filed in California on Monday, was an investor in MoneyGram and purchased the company securities between June 17, 2019, and February 22, 2021.

MoneyGram entered into a strategic partnership with Ripple in June 2019 in exchange for a $30 million investment from the San Francisco-based startup. Then, the remittance company detailed that it will utilize Ripple's xRapid product, later rebranded as on-demand Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term (ODL), and Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term 'XRP in foreign exchange settlement' as a part of its cross-border payment process.

MoneyGram received $38 million in net development fees from Ripple, which is around 15 percent of the company’s earnings, The Wall Street Journal reported earlier.

However, the remittance company was quick enough to distance itself from Ripple after the US regulator’s lawsuit alleging that XRP falls under the category of an unregistered security.

“MoneyGram does not utilize the ODL platform or RippleNet for direct transfers of consumer funds – digital or otherwise. Furthermore, MoneyGram is not a party to the SEC action,” MoneyGram wrote in a statement published on December 23, 2020.

Last month, MoneyGram further cut its ties with Ripple due to the ongoing litigation and concerns of the regulatory wrath on its established remittance business.

“Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple's platform,” MoneyGram stated.

The End of Ripple Partnership Might Dent MoneyGram's Financials

The lead plaintiff of the class-action lawsuit is now alleging that MoneyGram failed to disclose that XRP could be viewed as a security and now if the court orders against Ripple, the remittance company would lose a significant stream of its market development fees.

“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 lawsuit added.