Shah Gilani, chief investment strategist at Money Map Press, spoke before the opening bell about his outlook for the market and why he bought Coinbase at Varney & Company.
The world’s largest stablecoin issuer is taking steps to change its image in the United States as it faces continued scrutiny over its business practices.
The head of the global company that operates USDT, the most widely used dollar-backed crypto token, and holds a staggering $97 billion in U.S. Treasuries, spoke in a rare interview with FOX Business about transparency surrounding currency tokens. It cited widespread criticism regarding its lack of sexuality. Concerns about the company’s reserve assets and its business practices.
Tether CEO Paolo Ardoino also outlined how the 10-year-old company, which celebrates its 10th anniversary this month, is focused on revitalizing its brand. This effort includes partnerships with U.S. law enforcement agencies, expanding relationships with broker-dealer Cantor Fitzgerald and its CEO Howard Lutnick, and strategic investments in emerging technologies.
Tether Holdings CEO Paolo Ardoino during the Bitcoin Adoption 2023 Summit in San Salvador, El Salvador, November 7, 2023. (Photographer: Camilo Freedman/Bloomberg via Getty Images / Getty Images)
Ardoino, who took over the top job in 2023 after six years as the company’s chief technology officer, said: “Part of my role as CEO is to understand the work we can do and the The idea was to actually introduce that.” “For example, we currently work with over 180 law enforcement agencies across 45 different jurisdictions.”
Those partnerships include the FBI, Secret Service, and Department of Justice, which recently acknowledged Tether’s assistance in freezing illicit funds. Last month, Tether announced that it had partnered with two other crypto companies, Tron and TRM Labs, to form a dedicated oversight task force to combat financial crimes related to Tether’s stablecoin USDT.
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“We have 350 million users of our stablecoins around the world,” Ardoino said, adding that most users live in developing countries and use them as a hedge against weak monetary systems or currency deterioration in their own countries. He pointed out that he was buying USDT. “The public is tired of being influenced by poor government decisions regarding monetary policy,” he added. “We need to make sure our ecosystem is safe so we can continue to support them.”
One of the biggest criticisms Tether has received over the years is the use of stablecoins in illegal financial schemes such as money laundering, ransomware payments, and dark web transactions. The company faces allegations that it allows companies from sanctioned countries such as North Korea, Russia and Iran to circumvent traditional financial systems and enable crimes such as terrorism and human trafficking.
Tether Holdings CEO Paolo Ardoino attended the Paris Blockchain Week Summit held in Paris on April 9, 2024. (Photographer: Nathan Laine/Bloomberg via Getty Images / Getty Images)
This summer, Tether was the subject of a multimillion-dollar advertising campaign by the nonprofit activist group Consumers Research. The campaign included digital billboards in New York City’s Times Square, television ads, and the distribution of flyers to members of Congress accusing the company of corruption.
Although Ardoino has not publicly addressed the campaign so far, he acknowledged that Tether had been naive in failing to properly address these concerns publicly in the past, and said that Tether had suspended its public relations team until 2022. It was pointed out that it was not established.
“It’s just sad because it’s misrepresenting a technology and a company that is helping hundreds of millions of people,” Ardoino said. “We show our faces, cooperate with law enforcement, and honor the OFAC SDN list. So we can sleep well and be proud of what we built, and despite these smear campaigns, I can look at myself in the mirror.”
In a recent effort to combat bad actors, Tether blocked over $1.8 billion in USDT from over 1,850 cryptocurrency wallets, 636 of which were coordinated with U.S. government agencies.
In this illustration taken on June 16, 2023, a representation of the cryptocurrency Dogecoin is placed on the motherboard of a PC. (Reuters/Dado Ruvic/Illustration/File Photo)
Investing in emerging markets and technology
As the global adoption of dollar-backed stablecoins increases, the overall stablecoin market has rapidly grown to approximately $160 billion, and Tether’s profits have accelerated significantly. The company reported profits of $6.2 billion in 2023, surpassing the $5.5 billion of BlackRock, the world’s largest asset manager. In the first half of 2024 alone, Tether will generate $5.2 billion in profits, some of which will be reinvested in emerging technologies such as AI infrastructure, but Ardoino said the sector is too dominated by big tech companies. I’m thinking.
“One of the reasons we invested in AI infrastructure was because we wanted to give businesses the opportunity to access high-quality infrastructure that is essentially independent, rather than something owned by a large technology company,” he said. said. “We also believe in the importance of supporting the communities in which we operate from our payments to other businesses.”
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Tether is partnering with Nasdaq-listed Bitcoin mining company BitDeer and Utah-based startup BlackRock Neurotech (which is not affiliated with asset management company BlackRock), which is developing brain chip technology to help people. The company invests in a wide range of start-up companies across a variety of industries, including: Patients with neurological disorders such as ALS can communicate more effectively.
Ardoino points out that of the roughly $12 billion in corporate profits over the past two years, about half was set aside for investment in a separate account, with the remaining $6 going to USDT reserves.
“USDT currently has approximately 104% support,” he said. “Typically you have banks doing fractional reserves. We are over-collateralized and our first priority is to keep our stablecoins safe.”
USDT Reserve
Tether’s reserves have long been a source of controversy, with the entire crypto industry criticizing the company’s previous lack of transparency and audits. As a stablecoin, Tether’s tokens are pegged to the US dollar, and the company claims that all $119 billion worth of USDT tokens in circulation are fully 1:1 backed by dollar reserves. . However, because Tether is not based in the U.S. and conducts most of its operations offshore, it has not been fully audited by a U.S. accounting firm and there is skepticism about the true state of its reserves. There is a widespread view that
An investigation by the New York State Attorney General and the Commodity Futures Trading Commission found that Tether had misrepresented its USDT backing in the past and that its reserves were not always fully collateralized as the company claimed. did. It was also revealed that Tether’s sister company, the cryptocurrency exchange Bitfinex, at one point used Tether’s reserves to cover its own funding shortfalls, leading to concerns about the company’s financial health. created further uncertainty.
As part of the settlement with the New York Attorney General, Tether agreed to submit quarterly reports on its reserves for two years. The company is currently using the Italian arm of global auditing firm BDO to produce quarterly attestations of its stablecoin reserves. As of August 1, Tether had $118.4 billion in reserves and $5.3 billion in excess reserves, BDO reported. Tether currently publishes daily reports on its website detailing the amount of Tether in circulation and the US dollar reserves held by the company.
However, Tether has never undergone a full audit, even by BDO, as quarterly certifications do not qualify as a systematic examination of the entire company and financial statements.
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Another ticket to Tether’s reserves is Cantor Fitzgerald CEO and cryptocurrency enthusiast Howard Lutnick, who Ardoino said has looked into Tether’s books. , said it spent nearly two years trying to determine whether Tether had the assets it claimed.
Tether is deepening its relationships with broker-dealer Cantor Fitzgerald and CEO Howard Lutnick. (Christopher Goodney/Bloomberg via Getty Images/Getty Images)
“From what we’ve seen and what we’ve put in a lot of effort, they have the capital to say they have,” Lutnick said earlier this year, adding that Kantar has Treasury added that it manages many of Tether’s assets, including a large portfolio of.
Tether is currently the 18th largest holder of U.S. debt with $97 billion worth on its books, according to the company. Ardoino said Tether’s decision to purchase U.S. Treasuries was primarily to enable the company to efficiently process large redemption events and debt repayments.
“We’ve grown to the point where we need partners like Howard and Cantor to hold U.S. Treasuries,” Ardoino said. “Cantor has a direct connection to the Fed, which means that no matter what, payments can be easily made through that facility.”
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“If you look at everything on the market, nothing is as safe, protected and guaranteed as short-term U.S. dollar bills,” he added, adding that the company is transitioning away from holding commercial paper in its reserves. He pointed out that he was doing it.
While some may find comfort in backing USDT with U.S. Treasuries, others worry that Tether’s large holdings in government debt could increase its risk if interest rates rise. . A sudden rise in interest rates could lead to a decline in the value of Tether’s Treasury holdings, straining its ability to meet redemption requests. This has intensified calls for Tether to submit to an audit by one of America’s “big four” accounting firms: Deloitte, KPMG, Ernst & Young and PricewaterhouseCoopers.
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Mr. Ardoino said he would be open to being audited by one of them, but that under the current administration, including regulators and anti-cryptocurrency lawmakers (he mentioned Massachusetts Sen. pointed out that the regulatory environment in the country is unfriendly and difficult to audit. Auditor accepts cryptocurrency companies, especially those outside the US, as clients
He hopes the results of November’s U.S. election will help change regulators’ attitudes toward the burgeoning digital asset market.
“When I was a kid, I remember America being the king of all new technology and new discoveries and basically everything,” said Ardoino, who was born and raised in Italy. “And I feel like for the first time in history, at least as far as I can remember, the United States has dropped the ball on probably one of the most innovative technologies of our time.”
