The USDe token sale was suspended by a German regulator due to significant noncompliance and possible breaches of securities laws.
Ethena GmbH’s USDe USDE$1.00, a synthetic dollar, has been banned from all public sales by BaFin, the German financial regulator, on the grounds that it breaches EU MiCAR requirements and that the company is selling unregistered securities in the area.
In a statement, BaFin directed Ethena to cease accepting new clients, shut down the online interface, and freeze the reserve assets supporting the token.
Additionally, BaFin designated a representative to keep an eye on the current state of affairs with Ethena. According to the regulator’s translated statement, “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.”
According to the statement, “investors can receive a sUSDe token in exchange for a USDe token because the USDe and sUSDe tokens are interconnected.”
The regulator said that secondary sales of the token would not be restricted or impacted, even if primary sales and token issuance are forbidden.
The USDe backing is still intact, and the token may still be redeemed via Ethena BVI Limited, according to a statement on X from Ethena Labs.
On July 29, 2024, Ethena filed a request for regulatory clearance under MiCA, with the expectation that the company would be “grandfathered” into the current regulatory structure.
On March 21, however, BaFin rejected the application, stating that it did not comply with the MiCA framework and that there were “serious deficiencies in the business organization.”
Approximately 5.4 billion Ethena tokens are in circulation at the moment, according to BaFin. However, a large number of these tokens were issued before to MiCA’s implementation and outside of German jurisdiction.
Despite the hazards involved with synthetic dollars, Ethena continues to draw institutional investment for its products.
In February 2024, Ethena gathered more than $100 million from investors to introduce iUSDe, a new token targeted at institutional investors.
Additionally, the company teamed up with World Liberty Financial, a decentralized finance (DeFi) network that was launched in December 2024 by US President Donald Trump.
World Liberty Financial bought 500,000 ENA tokens, Ethena’s governance token, as part of the deal.
To encourage the adoption of stablecoins, the MEXC cryptocurrency exchange stated on February 26 that it will invest $20 million in Ethena’s USDe.
Magazine: Unstablecoins: Bank runs, depegging, and other dangers are imminent
