A New York-based law firm, Rosen Law, has filed a class-action suit against MoneyGram for failing to protect investors from its business partnership with Ripple.
Ripple SEC Saga Continues
Rosen Law said it filed a class-action lawsuit on behalf of investors who purchased MoneyGram International securities between Jun 17, 2019, and Feb 22, 2021.
The lawsuit alleges investors suffered losses as MoneyGram did not caution investors regarding its business ties with Ripple, its longtime partner.
In Dec 2020, Ripple faced legal action from the U.S. Securities and Exchange Commission (SEC) for allegedly selling unregistered securities through a digital asset known as XRP – a claim that Ripple has refuted.
The law firm claimed that MoneyGram failed to disclose certain information, including the fact that its partner company Ripple could face enforcement action from the SEC and thus negatively impact investor returns.
“Defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that (1) XRP, the cryptocurrency that MoneyGram was utilizing as a part of its Ripple partnership, was viewed as an unregistered and therefore unlawful security by the SEC; (2) in the event that the SEC decided to enforce the securities laws against Ripple, MoneyGram would be likely to lose the lucrative stream of market development fees that was critical to its financial results.”
Recently, MoneyGram halted the partnership with Ripple and is no longer using XRP. This is expected to reduce revenue in the forthcoming quarterly reports and impact the underlying stock price.
One important point to note is that MoneyGram did, in fact, issue a statement warning investors of its ties with Ripple after becoming aware of the SEC enforcement action.
Disclosure: The author did not hold crypto mentioned in this article at the time of press.
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Author: Vishal Chawla