Tether’s U.S. Treasury Exposure Nears $120B

Plus, 🚫 New Ethereum rollup’s VC-free zone, 🚽 Movement Labs co-founder lands right in it, ⛓️ Pedophile Avi Eisenberg jailed, 📜 Crypto bill delayed by infighting?, and more!

Author

Juan Aranovich
May 02, 2025

Hi! In today’s edition:

  • 🏛️ Tether’s Treasuries soar

  • 🧱 A new rollup defies VCs

  • 📉 Movement Labs suspends co-founder

  • 👮‍♂️ Mango Markets thief jailed over kiddie-fiddler vids

  • ⚖️ Crypto market structure bill: Too many cooks

The Financial Freedom Report explores the role currency and banking play in the civil liberties and human rights struggles of those living under authoritarian regimes and how Bitcoin is used to push back.

By Tikta and Veronica Irwin

Tether, the world’s biggest stablecoin issuer, reported in its Q1 2025 attestation that its total exposure to U.S. Treasuries had reached a record high, approaching $120 billion as of March 31 — more than the entire holdings of countries including the United Arab Emirates and Germany.

That figure includes $98.5 billion in direct Treasury bills and more than $23 billion via repurchase agreements and other cash-equivalent assets.

The USDT issuer also reported an operating profit of more than $1 billion for the quarter — a figure the firm said had been driven mainly by returns on its U.S. Treasury holdings — although its operating result was down 83% from the previous quarter’s $6 billion.

The European Union’s Markets in Crypto-Assets regulation took effect at the end of March, and Tether’s non-compliance with the new rules has resulted in USDT’s delisting on several exchanges in Europe.

Despite those regulatory headwinds, Tether’s USDT remains the world’s largest stablecoin, with circulation having reached around $150 billion.

Ethereum Devs Propose New Donation-Funded Rollup

A group of Ethereum developers has proposed a new layer 2 rollup that prioritizes some of Ethereum’s key principles, without a token or what they describe as a “governance cult.”

Although the project operated independently from the Ethereum Foundation, a number of key Ethereum figures, including Vitalik Buterin, contributed to its development.

The project aims to be “stage 2” from day one and emphasizes credible neutrality, aiming to avoid centralized dependencies and risky governance models. It will be governed by a broad community multisig with a focus on censorship resistance.

R1 will also operate solely on donations, with no presales or venture capital funding. ETH contributions from the public will be its only source of support. 

Unlike most layer 2 networks, R1 will not issue a governance or utility token, nor will it have pre-mined allocations or private sales.

Public interest funding will support the project until 2030. After that, all transaction fees R1 collects will be burned instead of being used for development or profit.

“If you believe rollups should be a commodity, not a cartel, this is the movement,” the team said on X. 

Movement Labs co-founder Rushi Manche has been suspended from the firm, a decision the Trump family crypto venture-backed firm said it had made in light of an ongoing third-party review of what it described as “recent incidents involving a market maker.”

Movement Labs’ native token, MOVE, fell 20% following an announcement by Coinbase that it would suspend MOVE trading on May 15.

In March, Binance identified and froze profits from a market maker accused of liquidating 66 million MOVE tokens worth $38 million shortly after the token’s launch, triggering a steep price drop and sparking accusations of market manipulation.

A review of internal documents reportedly revealed that Movement Labs had allegedly been misled into inking a market-making agreement that gave Rentech, an intermediary firm without any digital footprint, control over a significant portion of the token supply.

Convicted fraudster and market manipulator Avraham “Avi” Eisenberg, who stole more than $100 million from decentralized exchange Mango Markets in October 2022, has been sentenced to 52 months in a U.S. federal prison for possession of materials depicting the sexual abuse of children.

Eisenberg pleaded guilty to possessing more than 1,200 images and videos of child sexual abuse that were discovered on his devices when he was arrested in December 2022.

He had previously been convicted by a federal jury of fraud and market manipulation related to his Mango Markets heist, but his sentencing for those charges remains pending as the judge considers a request for a new trial.

The U.S. Congress wants to pass a long-awaited piece of legislation, but the industry is speaking with four different voices about what should be in the law.

President Donald Trump, who received at least $13 million from crypto companies and executives for his inauguration, is urging a busy Congress to get a bill that enshrines clear rules for the crypto industry passed into law before it leaves for its August recess.

The problem is that the industry isn’t sure what it wants.

With competing legal theories and influential players pulling in different directions, can the crypto community reach a consensus in time, or will its own infighting kill the bill?

  • 🗳️ DeFi platform Sky’s core governance design team this week proposed a governance overhaul that would finalize its transition from MKR to SKY by mid-May, granting SKY full voting rights, enabling USDS staking rewards, and initiating a penalty schedule to accelerate token migration.

  • 📊 Crypto exchange Kraken generated revenue of $472 million during the first quarter of the year, up 19% year over year, driven by volatility arising from U.S. President Donald Trump’s erratic executive orders, as it prepares for a 2026 IPO and expands derivatives and equities offerings through acquisitions and new partnerships.

  • 🕵️‍♂️🇰🇵 Kraken confirmed on Thursday that it had intentionally advanced a North Korean hacker through its job application process to analyze their social engineering tactics and identity obfuscation, exposing multiple linked identities tied to sanctioned actors.

  • 📉 Strategy posted a $4.2 billion Q1 loss driven by BTC price declines but doubled down with a new $21 billion equity raise, increasing its bitcoin holdings to over 553,000 coins while lifting performance targets for BTC yield and dollar gains.

  • 🔐 Trump family-backed crypto venture World Liberty Financial’s new stablecoin, USD1, will be used to settle MGX’s $2 billion investment in Binance, marking a high-profile debut for the firm project as it angles to challenge dominant players such as USDC and USDT.

  • 💱 The U.S. Treasury moved to blacklist illicit Cambodian marketplace operator Huione Group from the financial system, citing its $24 billion role in the alleged laundering of cybercrime proceeds, which include helping North Korea’s Lazarus Group and facilitating so-called “pig-butchering” fake romance crypto scams.

  • 💼 Dao5 secured a $222 million fund to back blockchain infrastructure aimed at institutional and government use, and plans to convert the fund into a DAO later this year as it scales toward public sector blockchain adoption.

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