Stellar Joins MoneyGram Board – Implications of Ripple Rival’s Move

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Stellar Joins MoneyGram Board – Implications of Ripple Rival’s Move
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In a recent post on the Stellar website, Denelle Dixon, CEO and Executive Director of the Stellar Development Foundation (SDF), announced that Stellar had made a financial investment into MoneyGram (MGI). Stellar and MGI have worked together since 2021 and as early as 2019 on projects like stablecoins and money settlement in USDC on the Stellar blockchain.

The move makes Stellar a minority investor in MoneyGram and it will have a seat on the Board of Directors, in which Dixon will now represent SDF. It is unknown how much money changed hands but in a statement, Stellar said the funds came out of SDF’s cash treasury rather than its fund used to finance start-ups.

According to Dixon, the move focuses on expanding MGI’s “digital business, exploring blockchain technology, and contributing to the many other ways this financial technology company enables consumers and businesses to move and manage money in nearly every country around the world.” She added the investment would cement MGI’s role in the global payments market helping it to become “a digital-forward leader in fintech”.

Ripple and MoneyGram – a Complicated Relationship

Interestingly, Stellar was founded by Jed McCaleb, who also co-founded rival Ripple and served as its Chief Technology Officer before leaving the company. Ripple also had a partnership with MoneyGram, which involved a $50 million investment in MGI and allowed it to use Ripple’s cross-border payments network.

The U.S. Securities and Exchange Commission (SEC) charged Ripple in late 2020 for the alleged sale of $1.3 billion in unregistered securities. While the court has decided that in and of itself, XRP is not a security, the case is still ongoing, with a pending trial regarding the roles of CEO Brad Garlinghouse and Chairman and co-founder Chris Larsen in the sales of XRP and a pending interlocutory appeal by the SEC.

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MoneyGram ended the cooperation shortly after the SEC filed the lawsuit, with MGI’s Chief Financial Officer Larry Angelilli hinting at future cooperation “If there’s a resolution to the case, especially if Ripple prevails, then I would say there would be no problem,” adding that this could be a long way off.

MoneyGram used Ripple’s platform and XRP for its FX business for the euro, Philippine pesos, Australian dollar, and Mexican pesos. U.S. exchanges stopped XRP trading shortly after the lawsuit.

During a panel discussion, Angelilli said that the move of the SEC made it impossible to use Ripple and XRP, highlighting that Stellar and XLM worked differently and that they could use both systems. However, there has been no announcement if MGI would revisit its relationship with Ripple post the court decision.

The news has not immediately resulted in an increased demand for XLM, the native coin of the Stellar blockchain. XLM is experiencing a sell-off with the broader market, currently trading at $0.12, down 4% in 24 hours, according to CoinMarketCap.