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Wire transfer service MoneyGram has suspended its partnership with Ripple Labs in the wake of the SEC’s lawsuit against the crypto payments firm.
That suit, filed in December, alleged that Ripple’s sales of cryptocurrency XRP, beginning in 2013, were unregistered securities offerings.
Major cryptocurrency exchanges such as Coinbase and Binance have since delisted XRP, and leading crypto asset manager Grayscale dissolved its XRP-focused trust. XRP was at one point the third-largest cryptocurrency by market capitalization, but has dropped in price considerably following the lawsuit.
MoneyGram made the announcement Monday in its Q4 earnings release.
“Due to the uncertainty concerning their ongoing litigation with the SEC, the Company has suspended trading on Ripple's platform,” MoneyGram wrote. The company added that it is "not planning for any benefit from Ripple market development fees in the first quarter," meaning it doesn't expect any revenue from its Ripple deal this quarter. Representatives for MoneyGram were not immediately available for comment.
Ripple, in a statement sent to Decrypt, said it signed a multi-year contract in 2019 with MoneyGram that is "still in place and is not limited to their use of ODL [on-demand liquidity]." The Ripple spokesperson added: "Together we are actively leveraging and exploring alternative use cases. We look forward to finding a path forward with MoneyGram and have confidence that there will be more regulatory clarity in the U.S. for the use of digital assets and blockchain technology at the end of this lawsuit."
Part of the idea behind XRP is that it helps banks move money more efficiently—over the years, Ripple has partnered with traditional institutions like Santander Bank and Bank of America to use its software that uses XRP as a liquidity vehicle.
MoneyGram had been using Ripple as a means of facilitating international payments. In November 2019, Ripple completed a $50 million investment in the money transfer service.
After the SEC announced charges against Ripple, MoneyGram initially said it would take a wait-and-see approach, deferring any questions about the future of the partnership.
At the time, MoneyGram said it would “continue to monitor for any potential impact as developments in the lawsuit evolve.” The company stressed at the time, however, that it did not make use of Ripple's on-demand-liquidity product, or RippleNet, "for direct transfers of consumer funds—digital or otherwise."
MoneyGram's stock took a nosedive following its earnings statement, dropping close to 24%. The company reported earnings of $323.3 million in Q1, below the expected $325.7 million.
Editor's note: This story was updated after publication with additional quotes from MoneyGram's Q4 earnings report and comments from Ripple.