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The legal turmoil affecting blockchain platform Ripple (XRP) has spilled over to MoneyGram, a major partner in the payment network. The payment processing giant has been slapped with a class-action lawsuit for its association with Ripple.
MoneyGram sued over Ripple lawsuits
This latest development was reported by law firm Rosen in a recent statement. The class-action lawsuit, which was submitted yesterday, accuses MoneyGram of providing misleading information to investors. It also charges the payment firm for failing to educate investors regarding the status of Ripple’s XRP.
Rosen explains, “The defendants made false and/or misleading statements, and/or failed to disclose that XRP was considered an unregistered financial security and therefore not legal by the SEC.”
The plaintiffs blame MoneyGram for failing to clarify that the Securities and Exchange Commission (SEC) pressure on Ripple could directly lead to its financial losses. Rosen continues: “As a result, [MoneyGram’s] public statements were materially false and/or misleading. When the real details entered the market, it harmed investors.”
SEC lawsuits the primary concern from investors
MoneyGram was sued by investors who believe the company has long known that the SEC would act against Ripple and that the company should have informed them.
This new lawsuit explains why MoneyGram was quick to detach itself from Ripple in the past week. The payment processing firm revealed that it had stopped using Ripple’s On-demand liquidity (ODL) service over the week. It further confirmed that it had temporarily suspended trading on the Ripple platform.
While this lawsuit does not directly concern Ripple and XRP, it shows that the SEC lawsuit has damaged the San Francisco company’s brand. It is still early to judge what effect this latest news will have on XRP price. However, Ripple will need a significant respite to maintain its place within the top 10 coin rankings.
At the time of writing, XRP has a marketcap of $20 billion and exchanging hands at $0.4415 with a daily gain of 3.29%. It remains to be seen if more companies distance themselves from Ripple in the coming weeks.