Money stored on mobile payment apps may not be FDIC insured, US watchdog warns

BaFin, the German financial regulatory authority, has prohibited all public sales of Ethena GmbH’s USDe (USDe) — a synthetic dollar — claiming that the token violates the European Union’s MiCAR regulations and accused the firm of selling unregistered securities in the region.According to the announcement from the regulator, BaFin has ordered the firm to freeze the reserve assets that back the token, close down the website portal, and ordered the firm to stop taking new customers.The regulator also appointed a representative to monitor the ongoing situation with Ethena GmbH In a translated statement, the regulator wrote:”The BaFin also has reasonable grounds to suspect that Ethena GmbH in Germany sells securities in the form of sUSDe tokens from Ethena OpCo. Ltd. without the required prospectus.”“The USDe and sUSDe tokens are interconnected in such a way that investors can receive a sUSDe token in exchange for a USDe token,” the regulator continued.Despite the ban on primary sales and issuance of the token, the regulator said that secondary sales of the token will not be prohibited or affected. In a statement on X, Ethena Labs said the backing of USDe remains unaffected, and the token can still be redeemed via Ethena BVI Limited, despite the recent announcement from the German financial regulator.Source: Ethena LabsEthena GmbH files for MiCA approvalEthena GmbH submitted a request for regulatory approval under MiCA on July 29, 2024, and the firm expected to be “grandfathered” into the existing regulatory framework.However, BaFin denied the application on March 21, citing “serious deficiencies in the business organization” and a lack of compliance with the MiCA framework.BaFin acknowledged that there are currently around 5.4 billion Ethena tokens in circulation. However, many of these tokens were minted outside of the German jurisdiction and before MiCA took effect.Ethena attracts investment for its productsDespite the risks associated with synthetic dollars, Ethena continues to attract institutional investment for its products.Ethena raised over $100 million from investors in February 2024 to launch a new token called iUSDe geared toward institutional investors.The firm also partnered with World Liberty Financial, a decentralized finance (DeFi) protocol started by US President Donald Trump in December 2024.As part of the agreement, World Liberty Financial purchased 500,000 ENA tokens — the governance token of Ethena.On Feb. 26, the MEXC crypto exchange also announced a $20 million investment in Ethena’s USDe to promote stablecoin use.Magazine: Unstablecoins: Depegging, bank runs and other risks loom

The US Treasury Department has dropped cryptocurrency mixer Tornado Cash from its sanctions list, the agency said on March 21. The removal follows a January ruling by a US appeals court, which said the Treasury’s Office of Foreign Assets Control (OFAC) cannot sanction Tornado’s smart contracts because they are not the property of any foreign national. According to the January court ruling, “Tornado Cash’s immutable smart contracts (the lines of privacy-enabling software code) are not the ‘property’ of a foreign national or entity, meaning OFAC overstepped its congressionally defined authority.”In a March 21 statement, the Treasury said OFAC removed several dozen Tornado-affiliated smart contract addresses on the Ethereum blockchain network from its sanctions list. Tornado’s native token, Tornado Cash (TORN), is up around 60% on the news, according to data from CoinMarketCap. As of March 21, TORN has a market capitalization of around $73 million and a fully diluted value (FDV) of nearly $140 million, the data shows. OFAC is the Treasury’s office for administering economic and trade sanctions on states and foreign nationals.Tornado Cash lets users pool crypto deposits into a mixer and then withdraw it later to different wallet addresses, making the original funding source difficult to track.TORN is up around 60% on the news. Source: CoinMarketCapRelated: Tornado Cash dev Alexey Pertsev’s bail a ‘crucial step’ in getting fair trial, defense saysMoney laundering allegationsIn August 2022, OFAC sanctioned Tornado Cash after alleging the blockchain protocol helped launder cryptocurrency stolen by Lazarus Group, a North Korean hacking outfit. Lazarus Group has allegedly stolen billions of dollars in crypto through various cyberattacks. In February, Lazarus was accused of pilfering $1.4 billion from digital asset exchange Bybit in the largest-ever crypto exploit. In total, Tornado Cash has purportedly facilitated the laundering of more than $7 billion in illicit funds since the protocol was launched in 2019, according to the US Treasury.In 2024, a Dutch court found Alexey Pertsev, one of Tornado Cash’s developers, guilty of money laundering and sentenced him to 64 months in prison. In February, Pertsev was released on house arrest, while he prepared an appeal of his conviction. The Ethereum Foundation has pledged to donate $1.25 million for Pertsev’s defense. “Privacy is normal, and writing code is not a crime,” the EF wrote in an X post while announcing the donation on Feb. 26.Magazine: Did Telegram’s Pavel Durov commit a crime? Crypto lawyers weigh in

Crypto investors rejoiced after one of the industry’s longest-standing legal battles was overturned by the United States Securities and Exchange Commission, yet markets have seemingly accounted for the victory months ahead of the announcement, according to industry watchers.On March 19, Ripple CEO Brad Garlinghouse revealed that the SEC would dismiss its legal action against Ripple, ending four years of litigation against the blockchain developer for an alleged $1.3-billion unregistered securities offering in 2020.However, the outcome may not be as “bullish” since markets may have already priced in this development since President Trump’s election, according to Dmitrij Radin, the founder of Zekret and chief technology officer of Fideum, a regulatory and blockchain infrastructure firm focused on institutions.Ripple’s CEO said the SEC is dropping its case against the blockchain developer. Source: Brad Garlinghouse“Yes they are dropping the case but there was already the appeal,” he told Cointelegraph on the March 20 Chainreaction X show:“One of the most talked about and oldest cases in crypto has been won. It’s great for the market and Ripple as it can start its expansion in the US. But in general, it’s already priced in. I don’t see a big impact on price or the market.”XRP/USD, 1-month chart. Source: Cointelegraph Markets ProDespite an 11% relief rally after the March 19 announcement, the XRP (XRP) token is unable to remain above the key $2.5 psychological mark. The token fell over 6.3% since March 19, Cointelegraph Markets Pro data shows.Related: Crypto market’s biggest risks in 2025: US recession, circular crypto economySEC dropping Ripple case was “already expected” – Nansen analystOther analysts also attribute the XRP token’s lack of momentum to investors expecting an end to the SEC’s lawsuit against Ripple Labs, paired with generally poor market sentiment.“I’d attribute it to the market already pricing it in as well as the general market situation,” Nicolai Sondergaard, research analyst at Nansen, told Cointelegraph, adding:“It was, to be honest already expected at this point and the macro environment and general uncertainty are not doing XRP any favors.”Related: Bitcoin speculative appetite declines as investors seek safetyStill, some technical chart patterns point to a potential 75% XRP rally after the end of the SEC’s lawsuit.XRP/USD weekly price chart. Source: TradingViewAs of March 21, XRP bounced after testing the triangle’s lower trendline, eyeing a rise toward the upper trendline— around the apex point at the $2.35 level—by April. The ultimate target for this possible breakout is $4.35 by June, up 75% from the current price levels.Conversely, a drop below the lower trendline could invalidate the bullish setup, setting XRP on the path toward $1.28. The bearish target is obtained by subtracting the triangle’s maximum height from the potential breakdown point at $2.35.Despite XRP’s price trajectory, the SEC overturning the case will have a beneficial “long-term effect on the market because of the narrative change,” and investors’ expectations of a more crypto-friendly SEC, added Fideum’s Radin.Magazine: SEC’s U-turn on crypto leaves key questions unanswered