DeFi Faces a Crisis of Confidence: Token Examination, Tether’s Rating Cut, and Intensified SEC Crackdowns Converge

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DeFi Faces a Crisis of Confidence: Token Examination, Tether’s Rating Cut, and Intensified SEC Crackdowns Converge

Bitget-RWA2025/11/27 03:14

By:Bitget-RWA

- Edel Finance's token launch faces scrutiny as 160 linked wallets allegedly acquired 30% of its supply pre-launch, triggering a 62% price drop. - Tether's S&P downgrade to "weak" highlights risks from $12.9B gold and $9.9B bitcoin reserves, with gold holdings rivaling central banks. - SEC intensifies oversight, fining Yida Gao $4M for crypto fund misrepresentation while exchanges warn against crypto exemptions. - DeFi projects like World Liberty Financial spend $10M on token buybacks, yet WLFI remains dow

Ethereum's DeFi sector continues to face close examination as recent findings raise issues about token allocation methods and regulatory hurdles. A new report from

Bubblemaps

indicated that nearly 30% of Edel Finance's tokens

were reportedly obtained by a network of 160 interconnected wallets before its November 12 debut, with a total value of $11 million. These wallets, which received funds through Binance and MEXC, were described as being part of a complex web of liquidity positions intended to mask true ownership. Edel Finance, a lending platform specializing in tokenized equities and real-world assets, has since experienced a

62% decline in token value within a week

, according to CoinMarketCap. The co-founder of the project justified these actions as part of their token launch plan, but the situation has reignited discussions about equity in token distributions.

At the same time,

Tether

, the top issuer of stablecoins, is under increased examination.

S&P Global Ratings lowered its assessment of Tether's capacity

to uphold its dollar peg from "constrained" to "weak," pointing to greater holdings of riskier assets such as

bitcoin

and gold in its reserves.

Tether's latest quarterly report revealed $12.9 billion

in gold and $9.9 billion in bitcoin, with net earnings for the first three quarters of 2025 surpassing $10 billion. The downgrade cited concerns over limited disclosure, regulatory uncertainty, and questions about insolvency protection.

Jefferies analysts observed that Tether's gold holdings now

rival those of national banks like South Korea's, and the company's gold acquisitions made up almost 2% of global demand last quarter.

Regulatory scrutiny is intensifying as the U.S. Securities and Exchange Commission (SEC) ramps up its enforcement efforts.

Crypto venture fund manager Yida Gao agreed to a $4 million settlement

, after allegedly providing misleading information about previous investment returns and failing to share BitClout token discounts with investors. In a separate development, major exchanges such as Nasdaq and Deutsche Boerse

called on the SEC not to grant regulatory waivers

to crypto companies, citing risks to market fairness and competitive balance. The World Federation of Exchanges (WFE) stressed the importance of maintaining equal standards as tokenized equities become more prominent in mainstream finance.

On the other hand, certain DeFi protocols are testing buyback initiatives to restore investor trust.

World Liberty Financial, a DeFi project with Trump’s backing

spent $10 million to buy back 59 million

WLFI

tokens in a 12-hour period, following a previous $9 million repurchase in October. Despite these efforts, the token’s value is still 50% lower than its September high.

As the cryptocurrency industry contends with regulatory headwinds and internal governance issues, openness and equitable distribution remain essential for rebuilding confidence.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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- Bitcoin's price surge triggered Tether (USDT) outflows, raising liquidity risks as reserves face S&P downgrade. - NYDIG reports $3.55B ETF outflows in November, linked to corporate trades and algorithmic stablecoin losses. - S&P cites 5.6% Bitcoin exposure in USDT reserves, exceeding overcollateralization buffers, risking undercollateralization. - Analysts warn of self-reinforcing cycles as Bitcoin rallies coincide with Tether redemptions, straining liquidity. - Tether's 24% high-risk assets in reserves

Bitget-RWA•2025/11/27 05:14

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Bitget-RWA•2025/11/27 05:14

Global Exchanges Caution: Excluding Crypto May Undermine Market Fairness and Integrity

Reevaluating MMT After Quantitative Easing: Insights from the Latest Rise in MMT Price Forecasts and Their Implications for Market Outlook

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Bitget-RWA•2025/11/27 05:12

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AAVE +0.54% As Institutional Interest in Euro Stablecoins Continues to Rise

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Bitget-RWA•2025/11/27 05:12