Tether CTO has dismissed the WSJ investigative report as a “clown article”. The report highlights the massive concentration of control of USDT in the hands of a few.
On Thursday, February 2, the Wall Street Journal published a research report highlighting the highly polarized distribution of control of USDT by the Tether founders. This is yet another report on the years of allegations against Tether, which operates the world’s largest USDT stablecoin with $68 billion in circulation.
The documents refer to the 2021 Tether investigations conducted by the New York Attorney General and the Federal Commodity Futures Trading Commission. WSJ investigative report reveals Tether’s previously unknown ownership structure.
As stated, Tether’s USDT stablecoin is the largest stablecoin in the world and a key piece of infrastructure in the crypto world. The USDT stablecoin is the most widely used digital asset to exchange with other cryptocurrencies.
According to the WSJ documents, Tether started out from separate companies run by former child actor Brock Pierce and former plastic surgeon Giancarlo Devasini. Devasini is also the person who helped build the Bitfinex crypto exchange and is currently its CFO. According to the documents, only Devasini owned 43% of Tether in 2018.
Two other Bitfinex and Tether executives, lead lawyer Stuart Hoegner and CEO Jean-Louis van Der Velde, each owned a 15% stake in the stablecoin issuer at the time. The fourth owner was a businessman known as Christopher Harborne in the UK who controlled 13% of Tether.
Questions about the stability of Tether and its control
This is not the first time that doubts have been raised about the stability of Tether. Multiple reports in the past have claimed that Tether does not have enough reserves to support the liquidity of all of its USDT assets in circulation.
While Tether’s founders have denied all past allegations, the founders have not spoken about how they operate. But despite various accusations against the company, Tether has managed to navigate through the crypto carnage in the past. Citing the company’s most recent disclosures, Wall Street Journal reported:
“Tether’s assets slightly exceed the value of tethers in circulation, so it only has a small cushion against loss. Rising interest rates have likely generated a billion-dollar windfall for Tether owners, but volatility in the cryptocurrency market raised questions about Tether’s stability.”
Last year, Tether’s USDT stablecoin depegged from the USD on two occasions. One during the Terra crash in May 2022 and the other during the FTX exchange crash in November 2022. Both were times of massive withdrawals in the crypto space. However, the USDT stablecoin has since restored its peg.
Commenting on the WSJ article, Tether CTO Paolo Ardoino noted that “the more clown items, the more bondage grows. People understand that Tether stands for freedom and inclusion. This is upsetting MSM. Eventually, the perforation will break the media as well.”
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Bhushan is a FinTech enthusiast and has a good knack for understanding financial markets. His interest in economics and finance draws his attention to the new emerging markets of Blockchain technology and cryptocurrencies. He is continuously in a learning process and stays motivated by sharing the knowledge he has acquired. In his spare time, he reads thrillers and sometimes explores his culinary skills.
