A stablecoin worth $68 billion is controlled by Tether Holdings Ltd. at the center of the cryptocurrency industry’s alternate financial system. Tether trades far more often than bitcoin every day.
- According to a collection of documents examined by The Wall Street Journal, a group of four persons held an 86% ownership stake in Tether Holdings.
- The records are old, but they paint the best portrait of the individuals responsible for the largest stablecoin.
Tether’s Recent Disclosures
Tether has survived the recent crypto crime disaster. Like other stablecoins, its value is based on the assumption that Tether, Inc. will exchange one Tether for one dollar or vice versa. The claim that Tether has sufficient reserves to redeem every one of the approximately 68 billion tethers in circulation is at the heart of that. According to the company’s most recent reports, Tether has a minimal buffer against losses because its assets barely outpace the value of the Tethers in circulation.
Tether’s peak circulation was at $83 billion, and as of right now, the market has access to just under $68 billion, according to data from CoinMarketCap. Rising interest rates have proven Tether’s owners a windfall of several billions of dollars, but the cryptocurrency market’s turbulence sparked concerns about the viability of Tether. Last year, the cryptocurrency’s value significantly declined from the promised dollar level. Tether’s price for one unit dropped to 97.7 cents on November 10 and 95.6 cents on May 12.
Like the rest of the crypto business, the firm only provides a little information about itself. It has never revealed how it is owned, how its assets are managed, or how it would stop a tsunami of redemptions from bringing down the coin. Investors questioned its lending schemes, and it refused to provide the borrowers’ names or the collateral they pledged. Investors at other cryptocurrency companies are in danger due to secrecy, a lack of experience, and minimal oversight.
Tether’s Misrepresentations
Two federal investigations uncovered management issues with Tether. The corporation spent $61 million in 2021 to respond to inquiries from the CFTC and the New York attorney general. Experiments showed that Tether had repeatedly misled the public about the underpinning assets of the stablecoin. Tether didn’t support or contradict the findings of the study. Tether now shares more information about its assets, though still less than financial organizations of comparable size.
Tether’s Owners
Former plastic surgeon Giancarlo Devasini and crypto evangelist Brock Pierce, who played an adolescent hockey player in the Mighty Ducks movies, led their separate campaigns that eventually came together to become Tether. For a brief period, Steve Bannon managed Mr. Pierce’s former company, Internet Gaming Entertainment, which dealt in pre-bitcoin digital currency from video games and eventually held the role of White House top strategist.
Mr. Pierce and Mr. Devasini collaborated. Tether Holdings Ltd. was founded in the British Virgin Islands in September 2014. Currently, Mr. Devasini serves as Tether’s chief financial officer after Mr. Pierce abruptly left the company.
Mr. Hoegner has been Bitfinex’s general counsel since 2014. Mr. Hoegner’s prior practice concentrated on virtual currencies and online gambling. A cyberattack on Bitfinex in 2016 resulted in the loss of bitcoin, valued at $65 million at the time.
A businessman with dual citizenship in the UK and Thailand by the names of Christopher Harborne in the UK and Chakrit Sakunkrit in Thailand became Tether’s fourth primary owner due to the breach. According to the records, the four men collectively held around 86% of Tether through their holdings and another affiliated business.
Conclusion
Due to a large part of rising interest rates, Tether has turned into a profitable investment. If the over $68 billion asset portfolio held by Tether yields 4.5% annually, which is roughly what short-term Treasurys do, the company will earn around $3 billion annually. The interest in Tether currency is zero.
