MoneyGram Revenue Dips Following Suspension of Ripple Partnership Mar 1, 2021 Mar 1, 2021 Kelly Cromley http://1AZFjzw2#Nwf63pYaMWq#xIY
Market NewsMarch 1, 2021 by Kelly Cromley

MoneyGram Revenue Dips Following Suspension of Ripple Partnership

The Wall Street Journal has release a report regarding the termination of collaboration between Ripple and MoneyGram, and its outcome. According to the news release, the decision was taken last week and was based on the case filed by the US SEC (Securities and Exchange Commission) against Ripple over its native cryptocurrency XRP.

The revenue generated through the partnership is of great significance for MoneyGram. Nevertheless, the SEC’s legal case has created “logistical challenges” and “legal and reputational risks”.

MoneyGram utilized Ripple’s payment processing platform as “an alternative source of income”. Furthermore, Ripple’s payments network enabled MoneyGram to minimize the necessary working capital.

MoneyGram, in its latest filings, has revealed to SEC that it was paid by Ripple since 2019. These were aimed to “incentivize” MoneyGram to utilize the XRP fueled On-Demand Liquidity (ODL) system.

MoneyGram was paid in the form of cryptocurrency XRP, which is the main subject behind the lawsuit slapped by SEC on Ripple. According to the document published by WSJ, Ripple had paid roughly $38 million to MoneyGram last year in the form of “development fees.” Overall, the fees represent roughly 15% of MoneyGram’s adjusted earnings.

Last year, MoneyGram slashed its operating costs by up to 56%, mainly becaue of Ripple’s payments. In the final quarter of 2019, MoneyGram finished with assessed losses of $11.90 million. On the contrary, after a year of partnership with Ripple, at the end of last year, the company posted a net income of $7.30 million.

Considering the figures above and cancellation of partnership, MoneyGram anticipates its forthcoming earnings report to be negatively impacted. Nevertheless, its CFO, Larry Angelilli, has stated that they are trying to work out a solution with Ripple to carry on with earlier partnership.

MoneyGram’s CFO opined that a judgment or out of court settlement between the SEC and Ripple will be good for the company. However, Angelilli accepted that the legal case could see a judgment after long duration with the likelihood of an appeal against the ruling.

Ripple, in its latest media releases, has expressed optimism over the outcome of the legacase and believes that the judgment will “bring clarity to the regulatory treatment of blockchain technology and digital assets” in the US jurisdiction.

In that respect, Ripple is expected to benefit from the appointment of Gary Gensler as Chairman of the SEC (Securities and Exchange Commission) as he is well-known for “pro” cryptocurrency position. Many experts believe that both Ripple and the SEC will attain a settlement soon. Gensler’s hearing data has been scheduled for March 2021.

AuthorKelly Cromley

Kelly is our in house crytpto researcher, delving into the stories which matter from blockchains being used in the real world to new ico coming out.