A 8-K report by remittance provider, MoneyGram, from the United States Securities and Exchange Commission (SEC), has disclosed that Ripple has pumped large amounts of funds into the firm since its investment in the company in June 2019. But according to a Financial Times report, MoneyGram had classified these cash flows as revenue until it consulted with the SEC.
The filing revealed that Ripple had input $11.3 million into MoneyGram in the third and fourth quarters of 2019, in what has been described as “Ripple market development fees.”
It went on to state that these funds were previously included in the figures for revenue. However, MoneyGram reclassified the $2.4 million in Q3 2019 and $8.9 million in Q4 2019, after consulting with the SEC, as contra expenses. The filing reads:
“At the time the Company issued fourth-quarter guidance, it assumed Ripple market development fees would be accounted for as revenue, consistent with the third quarter treatment. As a result of the change, the Ripple financial benefit … is now accounted for as offset to operating expenses, in Transaction and Operations Support and is no longer included in revenue.”
Compensation For Bringing Liquidity to Market
In a press release by MoneyGram, the company stated it had received funds from Ripple divided over two quarters: in the fourth quarter, $8.9 million, and $2.4 million in the third, totaling $11.3 million. Its revenue for Q4 was reported to be $323.7 million.
“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 exchange trading activity.”
When asked in a previous interview whether organizations received incentives to sign up with Ripple, CEO Brad Garlinghouse, said that “it depends upon the shape and size and type and how high a priority” they are.
At the same time he admitted that Ripple “would not be profitable or cash flow positive (without selling XRP), I think I’ve said that. We have now.”
Cryptolydian reported last month that, MoneyGram launched FastSend, a new service that would allow real-time money sending, but will not use cryptocurrency XRP or Ripple’s technology.