Tether Holdings Ltd., the issuer of the world’s most widely used stablecoin, has long been a focal point in debates about cryptocurrency’s risks. As a so-called stablecoin, Tether aims to address the inherent volatility of digital currencies by pegging its value to government-issued currencies, such as the US dollar. Users exchange dollars for digital tokens, which can then be sent across platforms globally without interacting with traditional banking systems.
Despite enduring multiple crises, Tether has emerged as the dominant stablecoin in the crypto ecosystem. The company, registered in the British Virgin Islands, has approximately $120 billion in tokens circulating—comparable to the assets of a midsized US bank. However, questions about Tether’s practices persist. The firm reportedly holds a significant portion of its reserves in Bitcoin, unspecified loans, and investments, raising concerns about its financial stability.
“Tether has survived despite practices that would trigger a run on a traditional bank,” analysts note, citing its history of lending dollars to an insolvent, affiliated crypto exchange. The company’s expansion into commodity finance has further amplified scrutiny.
Links to Criminal Activity
Tether’s reputation has been marred by its alleged association with illicit activities. Reports suggest that the stablecoin has been used by a range of bad actors, including Russian arms dealers, Irish gangsters, North Korean hackers, and Hamas, to move billions of dollars. While Tether occasionally cooperates with authorities to freeze tokens linked to criminal operations, its efforts have been deemed insufficient by critics.
Federal prosecutors in the United States are reportedly investigating Tether, and the Treasury Department has considered imposing sanctions on the company, which could effectively bar Americans from using its services. Tether has denied any wrongdoing, but the persistent allegations continue to cast a shadow over its operations.
A Volatile Future
The potential return of Donald Trump to the White House has added another layer of complexity to the crypto world. While the former president has expressed support for making the United States a hub for digital currencies, critics argue that a lack of stringent regulations could exacerbate the risks posed by companies like Tether.
With its precarious financial practices and alleged links to criminal enterprises, Tether remains a contentious player in the cryptocurrency landscape. Its future, intertwined with broader regulatory efforts and political shifts, is fraught with uncertainty.
