Here’s what happened in crypto today

A tech startup looking to build an Ethereum-based synthetic dollar has raised $14 million in fresh financing. Meanwhile, 24 hours after YouTuber KSI was accused of being a pump-and-dump merchant, the boss of the project in question has come out to defend him. Plus, a coalition of banking and financial services groups in the United States have urged the SEC to update rules that could see American banks become custodians to spot Bitcoin exchange-traded funds. 

Ethena Labs receives fresh funding for synthetic dollar project

Technology startup Ethena Labs has  raised $14 million  in funding to further the development of its Ethereum-based synthetic dollar.

The funding round was disclosed on Feb. 16 and builds off a previous $6 million round that was led by Binance Labs, Gemini and Bybit, among others. The current round was primarily backed by venture capital firm Dragonfly.

Ethena Labs is developing USDe, a synthetic dollar backed by delta-hedging strategies using Ether  as primary collateral. Since launching in December, USDe has amassed more than $200 million in total value locked, according to industry data.

“USDe maintains its rough target to the U.S. dollar by delta-hedging assets provided by users minting USDe to short-staked Ethereum collateral using perpetual swaps to achieve ‘delta-neutral’ stability,” the company shared with Cointelegraph.

Ethena’s project hopes to build off the  enormous success of stablecoins , which have emerged as one of the single biggest use cases of blockchain technology. The total market cap of stablecoins is valued at $138 billion, according to Coincodex.

Xcad Network founder defends YouTuber KSI over pump-and-dump allegations

Oliver Bell, the founder of the Xcad Network, has leaped to the defense of YouTuber turned crypto guru KSI, who was accused of performing a pump-and-dump scam by investigator ZachXBT.

After ZachXBT shared screenshots of KSI’s X account  posting about XCAD  and then dumping $850,000 of the tokens in the days that followed, Bell posted a response, arguing that the YouTuber had all the rights to sell his tokens.

On Feb. 15, Bell said in a post that KSI had been one of their “biggest value adders” who made introductions and suggestions around the product. The executive argued that while KSI sold some tokens, the YouTuber “bought a lot more” than he sold.

Bell also directly disputed the allegations, saying KSI did not pump and dump XCAD. Bell wrote that KSI remains an active investor and believer who has “other wallets” and has been one of their “solid” supporters.

The internet celebrity further explained that he “didn’t have any malicious intent in trying to scam” and said that he was new to crypto and was excited. Attempting to explain the posts and the selling that followed, KSI said that every time he tweeted something, the opposite would occur, and that’s why he decided to “tweet the opposite” of what he “was actually doing.”

However, another crypto investigator, Coffeezilla,  argued  that KSI publicly saying one thing and then privately doing the opposite is the “definition of a pump and dump.” Whether it is successful or not, Coffeezilla argued that what KSI did was a pump and dump. “I don’t really buy that he had no clue that tweeting one thing would positively affect the price in his favor.”

Big banks are nudging the SEC for a slice of sweet Bitcoin ETF action

Major banks and financial institutions in the United States are pushing the United States Securities and Exchange Commission (SEC) to  readjust its definition of crypto assets , which could allow them to play a larger role in crypto, such as acting as custodians to the recently approved spot Bitcoin  exchange-traded funds.

On Feb. 14, a trade group coalition comprising the Bank Policy Institute, American Bankers Association, Financial Services Forumand Securities Industry and Financial Markets Association  pled  their case in a letter to SEC Chair Gary Gensler.

The group highlighted the recent approval of spot Bitcoin exchange-traded products in the U.S., noting that American banks were absent from the approved products as asset custodians.

“The Commission recently approved 11 Spot Bitcoin ETPs, allowing investors access to this asset class through a regulated product,” it said, adding:

“However, notably absent from those approved products are banking organizations serving as the asset custodian, a role they regularly play for most other ETPs.”

The letter requested that the SEC consider modifications to Staff Accounting Bulletin 121 (SAB 121), issued in March 2022, which provides guidance around accounting for crypto asset custody obligations.

Bitwise chief investment officer Matt Hougan on X said the letter suggests that Bitcoin ETFs have changed the “tone around crypto regulation in Washington,” others  commented  it was a clear sign that banks are signaling interest in joining the “digital finance wave.”