Ripple Labs’ cryptocurrency fell Tuesday after MoneyGram said its relationship with the tech firm was cut while it battled the government in court.
The price of XRP – the digital coin in the middle of one Securities and Exchange Commission lawsuit against Ripple – fell by almost 22 percent to around 47 cents from 2:10 p.m. after MoneyGram announced that trading on the Ripple platform had ceased.
The two companies hit a deal In 2019, MoneyGram used XRP to process cross-border payments, while Ripple paid the company’s “market development fees,” which totaled around $ 50 million last year.
However, MoneyGram put the deal on hold in December when the SEC accused Ripple of illegally raising more than $ 1.3 billion through the sale of the virtual coin, CEO Alex Holmes said Monday.
Holmes said the money transfer giant wanted to continue working with Ripple but decided to put the partnership on hold out of “caution”.
“I definitely hope that you are successful in your efforts with the SEC and that things are going in the direction you want,” Holmes said on a Monday Call for prizes. “I would say that we are currently interrupting these activities.”
According to Ripple, the multi-year contract with MoneyGram still exists. The contested company found that some market participants reacted “conservatively” to the SEC lawsuit, which “unnecessarily clouded the water and added uncertainty to the market.”
“We look forward to finding a way forward with MoneyGram and are confident that there will be more regulatory clarity for the use of digital assets and blockchain technology in the US at the end of this lawsuit,” said Ripple said in a statement.
Ripple and the SEC have agreed to bring the case to a jury in federal court in Manhattan. This emerges from a file submitted on Monday.
The focus is on whether XRP – the world’s seventh largest cryptocurrency by market value – is a security like a share that must be registered with the SEC under federal law.
The SEC claims Brad Garlinghouse, CEO of Ripple, and Christian Larsen, co-founder, personally sold approximately $ 600 million worth of XRP while the company circumvented disclosure rules to protect investors.
But Matthew Solomon, a lawyer for Garlinghouse, alleged in a trial Monday that the SEC had failed to tell “sophisticated market players” that it did not consider XRP a security until 2019. according to Law 360.
“This whole case is grossly overreach,” Solomon allegedly said.
Tuesday’s XRP slump took place in the middle of a wider sell-off in the crypto market that saw Bitcoin, Ether, and Dogecoin drop deep into the red.