LOS ANGELES - A class action lawsuit filed against MoneyGram International Inc. accuses the money transfer company of violating the federal securities laws under the Securities Exchange Act of 1934, according to March 1 documents in Los Angeles federal court.
The suit says that MoneyGram entered a partnership with blockchain tech and cryptocurrency developer Ripple Labs, and that Ripple agreed to invest $50 million in MoneyGram stock as part of the agreement.
MoneyGram share value consequentially skyrocketed over 150%.
According to the suit, MoneyGram and Ripple's reports were misleading to shareholders, with several adverse facts known by MoneyGram intentionally disregarded, including: Ripple's cryptocurrency is an unregistered security in violation of securities laws; Ripple knew as early as 2012 that its cryptocurrency was considered an investment contract and as such its security needed to be registered; and Ripple ignored the former legal advice and distributed the cryptocurrency on a large scale.
MoneyGram is accused of taking part in the sale of the unregistered cryptocurrency securities as a money transmitter. The value of the defendant's shares fell over 33% as a result.
The class of MoneyGram's investors, represented by plaintiff Daniel Glaab, seeks damages paid back deemed appropriate.
Glaab is represented by the Rosen Law Firm PA of Los Angeles.