Investors have filed a class-action lawsuit against money transfer service MoneyGram International, accusing it of making false claims about the XRP cryptocurrency and it’s partnership with Ripple Labs.
A class action lawsuit was filed against MoneyGram on behalf of investors who purchased MoneyGram securities between June 17, 2019 and February 22, 2021.
Investors claim that MoneyGram has made ambiguous statements regarding its partnership with Ripple Labs. In 2019, it became known that Ripple signed an agreement with MoneyGram, according to which Ripple will buy shares of the service worth $30 million, and then invest another $20 million in MoneyGram over two years. In addition, in 2019, MoneyGram management announced that it is testing the Ripple On-Demand Liquidity (ODL) solution for money transfers between the United States and Mexico.
At the end of last year, the US Securities and Exchange Commission (SEC) accused Ripple of conducting an unregistered ICO worth $1.3 billion, considering the XRP coins to be securities. Because of SEC’s lawsuit against Ripple, many cryptocurrency exchanges began delisting XRP, and the MoneyGram service said that it does not use the Ripple ODL platform for money transfers.
Investors accuse MoneyGram that the payment service deliberately failed to disclose information that XRP was considered by the regulator as unregistered securities. If the SEC applies securities laws to Ripple, it could negatively affect MoneyGram’s operations. The investors ‘ lawsuit states that MoneyGram’s public statements turned out to be false and misleading, and when reliable information became known, many investors suffered losses.
Earlier, MoneyGram management suggested that in the future, cryptocurrencies will be widely used for international money transfers, but the lack of liquidity is the main obstacle to achieving this goal.