MoneyGram Declared $11.3 Million Ripple Cash Injection As Profits
- SEC filing discloses that MoneyGram had received cash incentives from Ripple
- The funds amounting to $11.3 million had wrongfully been reported as profits
- Ripple’s CEO Brad Garlinghouse reveals that his company gives monetary incentives to its clients
On March 2, 2020, A U.S Securities and Exchange Commission (SEC) filing by remittance company, MoneyGram, revealed that Ripple has been inserting a huge amount of funds into the remittances business since it invested in the company in June last year.
Moreover, a recent report from Financial Times upon consulting with the SEC showed that MoneyGram had been classing these grants as revenue in the 3rd and 4th quarters of 2019. These funds had been included in revenue figures.
However, after consultations with financial regulators, MoneyGram reclassified the funds in Q3 and Q4 2019, as contra expenditures.
In a recent 10-K filing to the SEC, MoneyGram explained in more detail what these Ripple market development fees, paid in XRP, represent:
“The Company is compensated by Ripple in XRP for developing and bringing liquidity to foreign exchange markets, facilitated by the ODL platform, and providing a reliable level of foreign.”
Interestingly, the company behind the Ripple blockchain platform currently owns upwards of 10% of MoneyGram’s stock, acquired via various investments totaling up to approximately $50M.
Is Ripple Dumping XRP to Stay Afloat?
In related news that came out from Ripple on March 2, 2020, Ripple’s CEO Brad Garlinghouse intimated that the company largely depends on XRP sales to stay profitable.
In a statement to news reporters, Brad revealed that the funds earned from XRP sales are used to fund the various blockchain-oriented projects operated by the company. These monies could also be used to fund other in-house budgets, such as the MoneyGram remittances network.
While Brad clarified that Ripple’s software products make a separate and significant source of revenue for the company, it’s the XRP sales that have become a thorny issue within the XRP community.
There have been increasing appeals lately for Ripple to stop the monthly XRP token sales that some believe are hurt the coin’s value. In fact, some crypto analysts have opined that the blockchain startup has been dumping XRP into the market at the expense of the Ripple community.
Ripple Gives Incentives to Partners
In a remark that especially drew attention from crypto observers due to the fresh revelation of MoneyGram receiving funds from Ripple, Garlinghouse disclosed that the Ripple gives incentives to its clients based on the size, type, shape, and level of priority they have.
The fact that Ripple holds a significant portion of XRP’s total supply and can liquidate tokens at will to fund various initiatives remains one of the most controversial features of the token. This has even come under legal scrutiny by investors who argue that it is a ‘security.’
Featured image courtesy of Shutterstock. Source: Cryptopress.