Banks are looking to reduce exposure to crypto businesses, and crypto businesses are seeking to reduce exposure to the banking crisis. Tether’s latest audit report shows that the stablecoin issuer withdrew over $4.5 billion from banks in the first quarter to reduce counterparty risk, following Circle’s troubles during the collapse of Silicon Valley Bank.
This week also brought a change in the winds to Ripple’s battle with the United States Securities and Exchange Commission (SEC). The SEC filed a motion to seal some records, however, the motion was rejected by a US judge, which has been seen as a victory for Ripple, and key evidence in the costly dispute.
This week’s Crypto Biz explores Tether’s first quarter audit, Ripple’s partial victory against the SEC, Worldcoin fundraising and Ledger’s controversial recovery service.
Court victory for Ripple as judge denies SEC motion to seal Hinman docs
A motion from the US securities regulator to seal records of internal deliberations has been denied in a move seen as a win for Ripple and the crypto community. The SEC filed the motion on Dec. 22, 2022, to seal internal emails, text messages and expert reports after a speech from its former director William Hinman claimed Ether (ETH) – the native token of the Ethereum blockchain – is not a security. Ripple considers the speech as key evidence in its ongoing legal battle with the SEC, which alleges that sales of Ripple’s XRP (XRP) token violated US securities laws. Ripple has spent over $200 million defending itself against SEC allegations.
Tether boasts of its financial stability after strong profits, money moved out of banks
Stablecoin operator Tether pulled over $4.5 billion out of banks in the first quarter of 2023, leading to a “substantial reduction” in counterparty risk, the company said in its latest audit report. The market capitalization of its Tether (USDT) stablecoin grew from $66 billion to over $82 billion in the same period. The company boosted its US Treasury bills to a new high of over $53 billion, or 64% of its reserves. Combined with other assets, USDT is now backed by 85% cash, cash equivalents and short-term deposits. Owned by Hong Kong-based iFinex, Tether has fought negative allegations about its finances. The company was fined $18.5 million by the New York Attorney General’s Office for misrepresenting the fiat backing for its reserves in 2021.
Crypto community reacts to Ledger wallet’s secret recovery phrase service
Ledger’s latest feature has sparked discontent among the crypto community. Known as Ledger Recover, the company’s retrieval solution for hardware crypto wallets offers a safeguard in case users lose their seed phrase. However, the concept has enraged many in the crypto community, including security specialists. The service employs a technique where the user’s seed phrase is divided into three encrypted fragments, each sent to different external entities. These entities will be able to reconstruct the encrypted keys. The community brought up Ledger’s data leak in 2020, which exposed users’ email and mailing addresses, and phone numbers. Some believe the recovery service put a backdoor into seed phrases.
OpenAI CEO in ‘advanced talks’ for $100M Worldcoin funding
The bear market is not holding back 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 commence 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 lower interest rates benefit Bitcoin?
Cointelegraph analyst and writer Marcel Pechman explains how lower interest rates in the US will ultimately benefit Bitcoin (BTC) and the cryptocurrency market. Pechman also dives into Argentina’s economic crisis: Along with hyperinflation, the Latin American country saw its local currency, the peso, decline by 70% in the past few years, boosting the demand for US dollars, gold and Bitcoin.
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