The partnership between Ripple and MoneyGram has been described as symbiotic by most analysts. The latter has been experiencing difficulties in making profits and the XRP incentives have significantly helped it close the debt gap.
American giant money transfer company MoneyGram International Inc (NASDAQ: MGI) is taking a wait-and-see approach after the SEC decided to sue Ripple for selling unregistered security XRP. Ripple has invested approximately $52 million in MoneyGram over the years to incentivize the company for providing ODL liquidity.
“MoneyGram will continue to monitor the situation as it evolves,” a company spokesperson told CoinDesk in an emailed statement. “MoneyGram has continued to utilize its other traditional FX trading counterparties throughout the term of the agreement with Ripple.”
Apparently, the SEC has sued Ripple for selling XRP for seven-year to retail investors. MoneyGram shares dropped approximately 2.29% on Tuesday to close the day trading at $6.84. However, they were up approximately 1.17% during the after-hours trading session. The lawsuit was not a shock to most investors but the outcome of the case may affect XRP future market price and liquidity. Mind you, two crypto exchanges, CrossTower and Beaxy, have already delisted the asset until further notice. However, major exchanges including Binance and Coinbase continue to list XRP.
XRP market price has since plummeted over 25% in the past 24 hours after the news broke out. At the time of writing, XRP was trading around $$0.340425 according to the market data provided by Coinmarketcap. Notably, its market capitalization is at around $15 456 658 053 with its trading volume slightly above $11.7 billion. Although still ranked in the fourth position, XRP is at risk of being deposed by Litecoin and Bitcoin Cash that have experienced a sharp uptick in daily trading volume.
MoneyGram-Ripple Partnership at a Glance amid Issues with the SEC
The partnership between Ripple and MoneyGram has been described as symbiotic by most analysts. The latter has been experiencing difficulties in making profits and the XRP incentives have significantly helped it close the debt gap.
Notably, MoneyGram has in the past immediately sold all the XRP received from Ripple to the secondary market. “Specifically, from 2019 through June 2020, Ripple paid the Money Transmitter 200 million XRP, which the Money Transmitter immediately monetized by selling XRP into the public market, typically on the very days it received XRP from Ripple. The Money Transmitter publicly disclosed earning over $52 million in fees and incentives from Ripple through September 2020,” the lawsuit said.
MoneyGram is currently facing fierce competition in the remittance market as cheaper alternatives rob it of more customers. Without XRP incentives, MoneyGram revenue will significantly be affected. However, the company might have to wait for years till the case is finalized if the incoming Biden administration does not incline in Ripple’s favor.
With MoneyGram still facing several lawsuit cases, investors and analysts remain skeptical about its future prosperity.
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