Ripple’s Injection into MoneyGram

Recently, a bombshell SEC 8-K filing unveiled the financial ties between Ripple and MoneyGram. Since June 2019, Ripple has funneled a hefty sum into MoneyGram’s operations, and trust me, it’s not just pocket change!

From Revenue to Contra Expenses

The benjamins just became accountants’ worst nightmare. According to a report from the Financial Times, MoneyGram initially treated these cash injections as revenue until a chat with the SEC turned their financial world upside down. They revealed that in the third and fourth quarters of 2019, Ripple splashed out a total of $11.3 million in what they dubbed “Ripple market development fees”. So, when your pet accountant is having a meltdown, you can thank Ripple’s influence!

Reclassification Revelation

The plot thickened when MoneyGram decided to reclassify these funds after consulting the SEC. What had initially been reported as revenue morphed into contra expenses—basically a fancy way of saying it’s not revenue but a cost offset. To be specific, $2.4 million was reclassified for Q3 and $8.9 million for Q4, leading to a glaring financial editing session that left some confused.

Understanding Ripple’s Market Development Fees

After whispers in the industry, MoneyGram’s 10-K filing provided more context about the Ripple market development fees. Ripple compensates MoneyGram in XRP to develop and bring liquidity to foreign exchange markets using the On-Demand Liquidity (ODL) platform. It’s like a grower’s tip—funds are exchanged to ensure foreign exchange markets remain liquid, thus making the money flow smoother than your favorite cocktail on a summer night.

The Ripple CEO’s Take

In a previous tête-à-tête, CEO Brad Garlinghouse hinted that the motivation for partnerships with Ripple varies by company size, priority, and overall interest level. He even admitted, “we would not be profitable or cash flow positive [without selling XRP].” So, money talks, and in Ripple’s world, it sings karaoke!