Source: iStock / yevtony
Money transfer company MoneyGram claims their support for Ripple continues despite the announcement of suspending receiving “market development fees” – but the two companies had a bitter fate in the stock market with the shares of the former (many of whom are Ripple owners) who take a plunge.
Ripple began paying the fees to MoneyGram as part of an agreement to use Ripple’s under attack XRP tokens in international comparison deals. However, it appears that the payment company was startled by the ongoing legal showdown between Ripple and the US Securities and Exchange Commission (SEC). The SEC claims that XRP is an unregistered security, a claim that Ripple bitterly denies.
However, MoneyGram conceded during a FY 2020 fourth quarter earnings call transcribed by The Motley Fool that it “provided no benefit from Ripple market development fees in the first quarter” of the new fiscal year litigation with the SEC “due to uncertainty about the current fiscal year” , added that she has “suspended trading on Ripple’s platform.”
The company admitted it would incur a financial loss as a result and stated that it had a net cost benefit of $ 12.1 million from Ripple market development fees “in the first quarter of 2020”.
It also confirmed the news in an official press release stating that the SEC’s move had forced its hand.
Stocks fell on the news as MoneyGram also revealed lower earnings than previously forecast. On the Nasdaq market, on which MoneyGram is listed, shares in the money transfer company fell over 22% per exchange data.
Ripple raised eyebrows last year when it sold its $ 15 million shares in the company, about 18 months after investing around $ 50 million in MoneyGram.
Separately, MoneyGram CEO Alex Holmes stated during the call that Ripple still had his company’s “support”.
He claimed, “We had a great relationship with Ripple and it would be great to keep working with them. I think what they are trying to do is definitely unique. “
Holmes added,
“I think they have a good team there and they are definitely pushing to change the payments landscape, which is extremely admirable and something we would be [excited] take part. “
However, MoneyGram was keen to avoid further arguments with “government regulators in a number of countries,” adding that “when that happens, it’s no fun”.
He concluded,
“We definitely support Ripple’s efforts, but at the same time we have to do what is right for the organization.”
At the time of writing (09:22 UTC), XRP was trading at 7th place by market cap at USD 0.406, falling 31% in one day and 27% in one week, reducing its monthly gains to nearly 48%.
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