Crypto Business: Tether withdraws from banking institutions, Ledger’s hidden access for seed phrases and additional updates.

Banks are aiming to lessen their exposure to cryptocurrency firms, while crypto companies are attempting to mitigate their risk amid the ongoing banking crisis. Tether’s recent audit report indicates that the stablecoin issuer withdrew more than $4.5 billion from banks during the first quarter to minimize counterparty risk following Circle’s issues during the downfall of Silicon Valley Bank.

Recent developments have also shifted the dynamics in Ripple’s legal confrontation with the United States Securities and Exchange Commission (SEC), as a motion from the regulator to seal certain records was denied by a U.S. judge. This decision is perceived as a win for Ripple, which views the documents as crucial evidence in its expensive legal battle with the regulatory body.

This week’s Crypto Biz examines Tether’s first quarter audit, Ripple’s partial success against the SEC, Worldcoin’s fundraising efforts, and Ledger’s contentious recovery service.

Court victory for Ripple as judge denies SEC motion to seal Hinman docs

A motion from the U.S. securities regulator to seal records of internal discussions has been rejected, marking a victory for Ripple and the cryptocurrency community. The SEC submitted the motion on December 22, 2022, to seal internal emails, text messages, and expert reports following a speech by its former director William Hinman, which stated that Ether (ETH) — the native token of the Ethereum blockchain — is not classified as a security. Ripple considers this speech a vital piece of evidence in its ongoing legal dispute with the SEC, which claims that the sales of Ripple’s XRP (XRP) token breached U.S. securities laws. Ripple has invested over $200 million in its defense against SEC accusations.

Another win for transparency! Unredacted Hinman emails to be publicly available soon – stay tuned as the lawyers work through the mechanics to make that happen. https://t.co/o6puPypRHd https://t.co/qmaLVeQaP8

— Brad Garlinghouse (@bgarlinghouse) May 16, 2023

Tether boasts of its financial stability after strong profits, money moved out of banks

Stablecoin provider Tether withdrew over $4.5 billion from banks in the first quarter of 2023, resulting in a “significant reduction” in counterparty risk, according to its latest audit report. The market capitalization of its Tether (USDT) stablecoin increased from $66 billion to over $82 billion during the same timeframe. The company raised its U.S. Treasury bills to a record high of over $53 billion, representing 64% of its reserves. Together with other assets, USDT is now supported by 85% cash, cash equivalents, and short-term deposits. Owned by Hong Kong-based iFinex, Tether has faced negative claims regarding its financial practices. In 2021, the company was fined $18.5 million by the New York Attorney General’s Office for misrepresenting the fiat backing for its reserves.

Crypto community reacts to Ledger wallet’s secret recovery phrase service

Ledger’s new feature has generated dissatisfaction within the crypto community. Dubbed Ledger Recover, this retrieval solution for hardware crypto wallets provides a safeguard in the event that users lose their seed phrase. However, the concept has provoked outrage among many in the crypto space, including security experts. The service utilizes a method where the user’s seed phrase is split into three encrypted segments, each sent to different external parties. These parties will have the ability to reconstruct the encrypted keys. The community recalled Ledger’s data breach in 2020, which compromised users’ email and mailing addresses, as well as phone numbers. Some believe that the recovery service introduces a backdoor into seed phrases.

First they exposed mailing address, phone numbers, and email addresses of their customers…
And now they’ve put a back door into seed phrases.
It’s time to say goodbye to @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 hindering Worldcoin funding efforts. The company co-founded by OpenAI CEO Sam Altman is reportedly in “advanced talks” to secure $100 million in funding for Worldcoin — a project aimed at creating a globally owned cryptocurrency. Worldcoin is preparing to launch its blockchain protocol and begin recording transactions within “the next six weeks” after operating in beta. Recently, it introduced its own gas-free crypto wallet for verified users.

Before you go: How will lower interest rates benefit Bitcoin?

Cointelegraph analyst and writer Marcel Pechman discusses how lower interest rates in the U.S. will ultimately benefit Bitcoin (BTC) and the broader cryptocurrency market. Pechman also examines Argentina’s economic crisis: Alongside hyperinflation, the Latin American nation has seen its local currency, the peso, decline by 70% in recent years, increasing the demand for U.S. dollars, gold, and Bitcoin.

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