Ripple’s entry into MoneyGram to strengthen XRP in summer 2019 was controversial. Financially at least, Ripple is now realizing millions in profits through the sale of MoneyGram shares. But the cooperation is to last.
Ripple (XRP) is currently in the headlines due to price gains and an upcoming airdrop from Spark. But many experts continue to look closely at what is happening behind the scenes at Ripple. And there are some remarkable things to report: Because Ripple is beginning to divest shares in MoneyGram. This becomes evident from a mandatory announcement to the US stock exchange supervisory authority and is explosive. To understand this, a little mathematics and a review of the partnership between Ripple and MoneyGram is necessary.
The story of Ripple and MoneyGram
In the summer of 2019, Ripple bought into the financial services provider MoneyGram for 50 million US dollars. Ripple’s goal was for MoneyGram to use XRP as a bridging currency for international transfers, thus providing practical proof of the XRP concept. Meanwhile, MoneyGram was experiencing significant financial problems at the time and was pleased to see Ripple’s entry. At that time, MoneyGram’s share price was below $2 and Ripple was prepared to pay a premium of about 180 percent, or $4.10.
Meanwhile MoneyGram is quoted at almost 7.50 US dollars and Ripple wants to sell. Ripple has or will make up to 4 million of his MoneyGram shares into cash and, according to a spokesman, is referring to the motivation to take profits. Ripple held a good 6.2 million shares in MoneyGram before the sales plans and also has the contractually agreed right to buy up to 5.9 million more. In this respect, it doesn’t sound unreasonable for Ripple to say that the current transactions do not mean that MoneyGram has turned its back on the company.
But there is another very important detail: Roughly calculated, Ripple now makes a profit of 15 million US dollars with a block of shares from MoneyGram. But this does not include the substantial bonus payments in XRP, which Ripple distributes to MoneyGram every quarter. These now amount to at least 25 million US dollars. In plain language: According to all available information, MoneyGram remains a subsidy business for Ripple. MoneyGram has not wanted to comment on the situation so far.
Conclusion: Creative accounting at Ripple?
It can be heard that Ripple and MoneyGram have already extended their partnership until July 2023. And to be honest: Ripple’s hope for financial gains seems unlikely. Instead, it is likely to continue to be about MoneyGram, a reference user of XRP in the financial industry. Of course, it cannot be ruled out that Ripple and MoneyGram will present and explain their close connections even more transparently. In any case, the financial risks of the cooperation are clearly on Ripple’s side.
Well, and XRP? is still trading at well over USD 0.50, raising hopes of leaving two years of weakness behind. December 12 is the date for Spark’s airdrop – after that it will become clear whether XRP’s comeback is sustainable or whether a bubble will burst.
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