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MoneyGram International misrepresented its partnership with Ripple Labs, a fintech company, and the legal status of the XRP token, according to a recently filed class action lawsuit.
The nationwide class action seeks to represent those who invested in MoneyGram, one of the world’s largest money transfer companies, between June 17, 2019 and Feb. 22, 2021. The lawsuit, filed in California federal court on Monday, claims that the company failed to tell its investors that the cryptocurrency it was using, the XRP token, was considered an unregistered security by regulators.
Indeed, Ripple Labs was hit with a class action lawsuit earlier this year by Florida investors who claimed the company sold its XRP tokens in violation of securities law.
Allegedly, MoneyGram entered into a partnership with Ripple Labs in 2019 to use the unregistered XRP token. Despite knowing the cryptocurrency was unregistered and, thus, unlawful, MoneyGram failed to disclose this information to investors.
The class action lawsuit alleges when the Securities and Exchange Commission (SEC) decided to enforce the law against Ripple over the use of its unregistered security in December of 2020, Class Members’ investments in MoneyGram suffered as a result.
“The SEC alleges a brazen scheme in which Ripple received legal advice as early as 2012 that XRP could be considered an investment contract and therefore a security that needs to be registered under the securities laws,” states the lawsuit. “Nevertheless, Ripple decided to ignore this advice and assume the risk of initiating a large-scale distribution of XRP without registration.”
The class action lawsuit claims that MoneyGram was wrapped up in the SEC investigation as well for allegedly selling XRP tokens on the open market. By 2021, MoneyGram had allegedly suspended trading on Ripple’s platform due to the SEC action. As a result, MoneyGram investors saw the stock decline by 33.2 percent on Feb. 19, 2021, claims the lawsuit when the news broke.
The class action lawsuit accuses MoneyGram and its executives of violating securities law and is seeking damages, as well as court and attorney fees.
Are you a MoneyGram investor? What do you think about the class action lawsuit allegations? Tell us in the comment section below.
The lead plaintiffs are represented by Laurence M. Rosen of The Rosen Law Firm, PA.
The MoneyGram XRP Class Action Lawsuit is Plaintiff v. MoneyGram International, Inc, et al., Case No. unknown, in U.S. District Court for the Central District of California.
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