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Investor Briefing: The Embattled Stablecoin Giant Tether!

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On X, some analysts label Tether as one of the most significant scams in history. Over recent years, Tether has faced scrutiny from regulators and law enforcement agencies, raising serious compliance concerns. In the EU, the stablecoin is at risk of being delisted from crypto exchanges due to its failure to secure a MiCA license. Despite these challenges, Tether remains a highly successful and profitable operation within the crypto industry, demonstrating resilience amid ongoing regulatory issues.

Some Key Indicators

  1. Tether’s Profitability and Investments:
    Tether Holdings Ltd. is projected to achieve over $10 billion in net profits for 2024, Tether CEO Paolo Ardoino announced in a recent interview. These profits primarily come from investing its reserves, which back stablecoins like USDT, into US Treasuries, gold, and other securities. Tether reported a $5.2 billion profit for H1 2024 in its Q2 report.
  2. Market Capitalization Growth:
    Tether claims to have over 350 million users worldwide. USDT’s market capitalization has grown significantly, adding nearly $50 billion in 2024 to reach over $140 billion. This growth reflects increased demand for the stablecoin rather than direct investment in Bitcoin.
  3. Strategic Investments:
    Tether has been diversifying its investments, but not specifically into Bitcoin. Notable investments include:
  • A $775 million investment in Rumble, a video-sharing platform
  • Plans to launch an AI platform in early 2025
  • Investments in Bitcoin mining, biotechnology, and other innovative sectors
  1. Alleged Market Manipulation:
    In July 2024, plaintiffs in a longstanding class action lawsuit against Tether and its affiliate, Bitfinex, submitted an amended complaint. The lawsuit alleges that Tether and Bitfinex engaged in market manipulation and violated antitrust laws by issuing unbacked USDT to inflate crypto prices. Tether has consistently denied allegations of market manipulation. While there is a correlation between USDT supply and Bitcoin’s price, this doesn’t imply causation. Studies suggest that increases in USDT supply might signal that large investors are preparing to buy cryptocurrencies, rather than Tether directly manipulating the market.
  2. Regulatory Challenges:
    Tether has been under investigation by U.S. federal prosecutors for potential violations, including allegations of using unbacked USDT to manipulate cryptocurrency prices. In October 2024, The Wall Street Journal reported that Tether was the target of a federal criminal investigation for possible violations of sanctions and anti-money-laundering rules. Tether is facing regulatory challenges in the EU due to implementing the Markets in Crypto-Assets (MiCA) framework, which may affect its operations in Europe.

The Money Laundering Currency

The Financial Times recently labeled Tether (USDT) as the “criminal’s go-to cryptocurrency,” a description that reflects its growing popularity among internationally active criminal organizations. Tether has become the de facto currency for facilitating illicit transactions, cementing its role as a leading money laundering tool in the crypto ecosystem.

Tether’s recent investment in StablR, a European stablecoin issuer, must be viewed within this troubling context. StablR was founded by Gijs op de Weegh, the former COO of Payvision—a payment processor notorious for its facilitation of cybercrime. Payvision’s operations were marred by connections to high-risk and criminal clientele, ultimately leading ING, which acquired Payvision in 2018, to shut it down in 2022 amidst mounting scandals. The fallout continues to this day, with Payvision and ING facing lawsuits from victims of fraud facilitated through Payvision’s network.

Tether’s decision to invest in StablR raises further questions about its due diligence processes and commitment to ethical business practices. Critics of Tether find ample justification for their concerns in this investment, which ties the stablecoin giant to a figure deeply linked to one of Europe’s most notorious financial scandals.

Learn more about the Tether investment in StablR

Preliminary Conclusion

Tether‘s financial performance remains robust, with significant profits and market growth. However, the company faces regulatory headwinds in Europe that could reshape its global strategy. The coming months will be crucial in determining how Tether navigates these challenges and maintains its dominant position in the stablecoin market.

While Tether plays a significant role in the crypto ecosystem, it remains under legal and regulatory scrutiny concerning allegations of market manipulation. The outcomes of ongoing lawsuits and investigations will be pivotal in determining the company’s future operations and its standing within the financial landscape.

Share Information

If you have any information about Tether, its people, and its activities, please share it with us via our whistleblower platform, Whistle42.

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