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German financial regulator BaFin has officially closed its case against Ethena GmbH, the German arm of Ethena Labs, following a four-month dispute. This resolution involves a redemption plan for USDe stablecoin holders in the EU and EEA, marking Ethena GmbH's exit from these markets and shifting future claims to its offshore affiliate.
BaFin Concludes Ethena GmbH Investigation
BaFin and Ethena GmbH have reached an agreement on a redemption plan for USDe stablecoin holders, effectively concluding a four-month regulatory conflict. This development signifies Ethena GmbH's withdrawal from the European Union and European Economic Area markets.
Key Takeaways
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A 42-day redemption process for USDe holders has been initiated by BaFin, allowing direct claims against Ethena GmbH until August 6.
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After August 6, Ethena GmbH will be officially wound up within Germany, the EU, and the EEA.
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Subsequent claims from August 7 onwards must be directed to Ethena (BVI) Ltd., Ethena Labs' offshore affiliate.
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Ethena GmbH will have no outstanding issues related to its USDe operations post-redemption.
Regulatory Scrutiny and Enforcement Actions
The conflict began on March 21 when BaFin prohibited Ethena GmbH from publicly offering its USDe stablecoin, citing violations of the EU's Markets in Crypto-Assets Regulation (MiCA). The regulator accused the company of selling unregistered securities through its yield-bearing sUSDe tokens, which are linked to the USDe stablecoin.
BaFin's enforcement actions included:
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Freezing USDe reserve assets.
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Closing the company's website and portal.
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Ordering a halt to services for new users.
Ethena GmbH had applied for MiCA authorization on July 29, 2024, but BaFin rejected the application in March due to compliance failures. Despite these issues, approximately 5.6 billion USDe tokens remain in circulation globally, with most issued before the MiCA framework took effect.
Ethena GmbH's Exit from EU Markets
Following BaFin's actions, Ethena Labs announced on April 15 that its German subsidiary would cease all operations and would no longer pursue MiCA authorization in Germany. Ethena GmbH has not conducted any minting or redemption activities for USDe since March 21, when the regulatory enforcement began. Ethena Labs has not indicated any plans to re-enter the EU and EEA markets after the full implementation of the redemption plan.
Sources
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