Ripple’s $11.3 Million Contribution Into MoneyGram is Declared As Profits
SEC filing disclosed that MoneyGram received cash incentives from Ripple amounting to $11.3 million that had wrongfully been reported as profits. However, Ripple’s CEO Brad Garlinghouse set things straight confirming that his company gives monetary incentives to its clients.
Ripple invested in MoneyGram in June 2020 and has since been pumping huge sums of money into the venture. The revelation comes from a U.S Securities and Exchange Commission (SEC) filing on the 2nd of March 2020.
A recent Financial Times report on the backdrop of further SEC consultation indicates that MoneyGram classed these grants as revenue. They were included in the financial data of the 3rd and 4th quarters of 2019. Further consultations with financial regulators by MoneyGram have however led to their reclassification as contra expenditures.
A more recent 10-K filing by MoneyGram to the SEC, shed more light on what these Ripple market development fees, paid in XRP, stand for. According to MoneyGram, they are compensated by Ripple in the form of XRPs for developing and bringing liquidity to foreign exchange (Forex) markets, facilitated by the ODL platform, and providing a reliable level of Forex.
Ripple Inc, the company that owns the Ripple blockchain platform has in excess of 10% of MoneyGram’s stock. The stocks were acquired via various investments to the tune of around $50M. This has raised the question, Is ripple Dumping XRP to Stay Afloat?
Ripple’s CEO Brad Garlinghouse made a startling revelation on the 2nd of March 2020, which doesn’ help with the XRP dump narrative. The firm is heavily reliant on XRP sales to earn profits.
The CEO revealed that the funds gained from XRP sales are in turn used to fund the company’s various blockchain-oriented projects. A part of these proceeds may also be diverted towards in-house allocations, 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 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.’