MoneyGram is facing a lawsuit for allegedly misleading investors about the cryptocurrency XRP, which it has been utilizing in money transfers for some time.
On Tuesday, Rosen Law Firm announced it has filed a class-action lawsuit on behalf of those who bought MoneyGram securities between June 17, 2019, and Feb. 22 of this year. The law firm believes these investors may now be entitled to compensation after MoneyGram partner Ripple got in hot water with the Securities and Exchange Commission in December.
The SEC alleged Ripple’s sales of XRP were in fact an ongoing $1.3 billion sale of unregistered securities. The case is still in the pretrial discovery phase.
Rosen alleged that MoneyGram had “made false and/or misleading statements and/or failed to disclose that: XRP, the cryptocurrency that MoneyGram was utilizing as part of its Ripple partnership, was viewed as an unregistered and therefore unlawful security by the SEC.”
Read more: MoneyGram Takes Wait-and-See Approach as SEC Sues Partner Ripple
If the SEC enforces securities laws against Ripple, “MoneyGram would be likely to lose the lucrative stream of market development fees that was critical to its financial results throughout the Class Period,” the Rosen law firm states. Further, “As a result, [MoneyGram’s] public statements were materially false and/or misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.”
Ripple has been paying MoneyGram to use XRP in its settlement services since 2019. The money sender has reaped $61.5 million in these “market development fees” in the time since.
On Feb. 22, MoneyGram said it was stepping back from its partnership with Ripple, citing the legal uncertainty around XRP.