MoneyGram Pauses Collaboration with Ripple Temporarily

Upon releasing its 2020 full-year financial results, MoneyGram announced that it is not planning benefit from market development fees from Ripple. The main reason behind the company’s decision is the uncertainty, brought by SEC’s ongoing legal complaint against Ripple.

MoneyGram Halts Collaboration with Ripple

US-based money transfer company, MoneyGram announced that it is not planning any benefit from Ripple market development fees in the first quarter of 2021. The announcement came on Monday when the company released its fourth-quarter and full-year 2020 financial results.

MoneyGram justified its decision with uncertainty concerning the U.S. Securities and Exchange Commission’s (SEC) ongoing complaint against Ripple. Furthermore, MoneyGram has also suspended trading on Ripple’s platform.

The collaboration between the two companies was initiated back in 2019. Since then, MoneyGram has been receiving “market development fees” from the company. According to MoneyGram, in Q1 2020, the company has realized a net expense benefit of $12.1 million in such fees. Furthermore, since the start of the collaboration to date, the company has received approximately $61.5 million in market development fees.

SEC’s Legal Claim Brings Hardships for the Company

This is the latest misfortune for Ripple since last week SEC updated its complaint against the company. Initially filed back in December 2020, SEC’s complaint claims that Ripple breached security laws back in 2013 by not registering a 14.6 billion XRP token sale. Furthermore, last week, SEC updated its complaint claiming that investors were not informed in 2013 due to an “information vacuum“.

Consequently, last week, the global trading platform and cryptocurrency exchange, PayBito, announced that it temporarily suspended its XRP trading feature. The company justified this action mainly with the ongoing lawsuit between SEC and Ripple.

In a statement from last week, Raj Chowdhury, managing director at PayBito assured that the company remains committed to being the most reliable platform for cryptocurrencies. Furthermore, he acknowledged that the company’s decision will “certainly not affect” the users from accessing, security, or transferring XRP from their wallets to other exchanges. 

On the bright side, Ripple is now registered as a limited liability company in Wyoming. This was confirmed by records from the Wyoming Secretary of State. By entering the state, Ripple now has a registered agent based in Cheyenne.

But why did Ripple choose Wyoming? One of the main reasons is the crypto-friendly laws in the state. In Wyoming, crypto companies are exempt from state corporate tax, franchise tax, property, and sales tax. This makes the state particularly attractive for crypto companies.