Banks want to reduce risk for crypto businesses, just as crypto businesses want to reduce the risk of the ongoing banking crisis. Tether’s latest audit report reveals that the stablecoin issuer withdrew more than $4.5 billion from banks in the first quarter to hedge against counterparty risk following Circle’s troubles during the Silicon Valley Bank collapse.
The past few days brought a change in the winds in Ripple’s battle with the United States Securities and Exchange Commission (SEC), with a proposal by the securities regulator to seal certain records rejected by a US judge. The move is seen as a victory for Ripple, which sees the documents as key evidence in its costly dispute with the regulatory agency.
This week’s Crypto Biz explores Tether’s Q1 audit, Ripple’s partial victory against the SEC, WorldCoin fundraising and Ledger’s controversial recovery service.
Court Win For Ripple As Judge Rejects SEC Motion To Seal Hinman Docks
An offer from the US securities regulator to seal records of internal deliberations has been rejected in a move seen as a victory for Ripple and the crypto community. The SEC filed a motion to seal internal emails, text messages and expert reports on December 22, 2022, following a speech by its former director William Hinman that claimed that ether (ETH) – the native token of the Ethereum blockchain – Not a security. Ripple views the speech as a key piece of evidence in its ongoing legal battle with the SEC, which alleges that the sale of Ripple’s XRP (XRP) token violated US securities laws. Ripple has spent over $200 million defending itself against the SEC’s allegations.
Another win for transparency! The declassified Hinman emails will soon be publicly available — stay tuned as lawyers work through the mechanics to make this happen. https://t.co/qmaLVeQaP8
— Brad Garlinghouse (@bgarlinghouse) May 16, 2023
Tether Claims Its Financial Stability After Strong Profits, Money Walked Out of Banks
Stablecoin operator Tether pulled out more than $4.5 billion from banks in the first quarter of 2023, the company said in its latest audit report, which “significantly reduced” counterparty risk. The market capitalization of its Tether (USDT) stablecoin grew from $66 billion to over $82 billion over the same period. The company raised its US Treasury bills to a new high of more than $53 billion, or 64% of its reserves. Combined with other assets, USDT is now 85% backed by cash, cash equivalents, and short-term deposits. Tether, owned by Hong Kong-based iFinex, has made negative allegations about its finances. The company was fined $18.5 million by the New York Attorney General’s office for misrepresenting statutory backing for its reserves in 2021.
The latest feature of Ledger has sparked discontent among the crypto community. Known as Ledger Recover, the company’s recovery solution for hardware crypto wallets provides a safeguard in case users lose their seed phrase. However, the concept has angered many in the crypto community, including security experts. The service uses a technique where the user’s seed phrase is split into three encrypted pieces, each sent to different external entities. These entities would be able to regenerate the encrypted keys. The community raised the issue of a data leak of Ledger in 2020, which exposed users’ email and mailing addresses and phone numbers. Some people believe that the recovery service has put a backdoor into the seed phrases.
First they exposed the postal addresses, phone numbers and email addresses of their customers…
And now they’ve put a backdoor in the seed phrases.
it’s time to say goodbye @Ledger ✌️ https://t.co/FsZw1jUt6h
— Chris Dunn (@ChrisDunnTV) May 16, 2023
OpenAI CEO in ‘advanced talks’ for $100M Worldcoin funding
The bear market is not stopping WorldCoin funding. The company co-founded by OpenAI CEO Sam Altman is reportedly in “advanced talks” to secure $100 million in funding for Worldcoin – a project to create a global, collectively owned cryptocurrency. Worldcoin is preparing to launch its blockchain protocol and start recording transactions within the “next six weeks” after operating in beta. Recently, it launched its own gas-free crypto wallet for verified humans.
Before You Go: How Will Bitcoin Benefit From Lower Interest Rates?
Cointelegraph analyst and writer Marcel Pechmann explains how low interest rates in the US will ultimately benefit Bitcoin (BTC) and the cryptocurrency market. Pechman also dives into Argentina’s economic woes: With hyperinflation, the Latin American country has seen its local currency, the peso, decline by 70% over the past few years, driving demand for the US dollar, gold and bitcoin.
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