BaFin's investigation uncovered serious shortcomings in Ethena's business organization and violations of the Markets in Crypto-Assets Regulation , particularly concerning asset reserves and capital requirements. Consequently, BaFin has mandated that Ethena instruct its custodians to freeze the asset reserves backing the USDe token. Additionally, a special commissioner has been appointed to oversee the enforcement of these measures.
The regulator also suspects that Ethena GmbH has been offering securities, specifically sUSDe tokens from Ethena OpCo. Ltd., without the necessary prospectus, potentially breaching securities laws. BaFin is currently evaluating further supervisory actions, which may include prohibiting the public offering of these securities.
In response, Ethena Labs, the parent company of Ethena GmbH, has assured stakeholders that the BaFin directive will not disrupt existing USDe listings or the minting and redemption processes facilitated by Ethena Limited, which serves the majority of their users. The company emphasized that USDe remains fully backed, with all assets available for redemption, and clarified that no assets have been "frozen." Ethena Labs also announced plans to revise their terms of service within the coming week to reflect these developments.
Ethena GmbH had previously submitted an application for authorization to offer an asset-referenced token under MiCAR to BaFin on July 29, 2024. This application was intended to comply with regulatory requirements and ensure the lawful offering of the USDe token within the European Union. However, the recent findings by BaFin indicate that the company's compliance measures were insufficient, leading to the current enforcement actions.
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Cryptocurrency