Title: Tether’s Secretive Management Team Rakes in Fortunes as Crypto Industry Struggles
Subtitle: Stablecoin Maker Tether Sees Profits Soar Despite Regulatory Pressure
Date: [Insert Date]
by [Insert Writer’s Name]
Crypto is experiencing a tumultuous period as it faces severe scrutiny from regulators, resulting in a significant decline in the overall value of cryptocurrencies. However, amidst this challenging landscape, stablecoin manufacturer Tether has emerged as a thriving figure. The secretive British Virgin Islands-based company has earned a staggering market value of $83 billion for its digital dollar, up from $65 billion just a year ago. Notably, Tether reported a $1.5 billion profit for the first quarter of 2023, establishing its dominance as the largest provider of liquidity in the crypto market.
Tether’s profitmaking model is straightforward and low-risk. Customers exchange U.S. dollars for the company’s blockchain-based token, USDT (Tether). The company holds collateral primarily in Treasury bills, money market funds, bitcoin, and secured loans, allowing it to generate returns on these reserves. While USDTs are redeemable on demand for $1, customers do not earn interest on their holdings.
In March, Tether received a significant boost due to the collapse of Silicon Valley Bank. It was revealed that Tether’s major competitor, Circle, had more than $3 billion in uninsured deposits at SVB. This news caused Circle’s dollar-pegged stablecoin, USDC, to drop briefly to as low as 88 cents. Consequently, nearly $10 billion worth of assets fled to Tether, further solidifying its position in the market.
Tether’s market dominance and resilience have led Forbes to estimate that the company, if it were to be sold, could fetch as much as $9 billion. Such a valuation would transform its top executives into billionaires. Forbes calculates that Chief Financial Officer Giancarlo Devasini holds over 40% of the company, equating to a stake worth $4 billion.
Devasini is considered the mastermind behind Tether, despite his unconventional rise as a crypto billionaire. His official biography portrays him as a successful pioneer in the semiconductors market, with his business achieving revenues of 113 million euros annually before he sold it before the 2008 financial crisis. However, a 2021 Financial Times investigation painted a different picture, revealing that Devasini’s business empire had only generated 12 million euros in sales in 2007, subsequently leading to liquidation shortly after. Moreover, Devasini’s company, Acme, was involved in a patent infringement suit initiated by Toshiba over DVD format specifications. Tether maintains that the lawsuit had no adverse finding and was meritless.
Jan Ludovicus van der Velde, Tether’s CEO, operates primarily as a figurehead responsible for establishing high-level strategic relationships with banks and regulators. Both Van der Velde and Paolo Ardoino, the Chief Technology Officer, hold shares worth $1.8 billion each. Stuart Hoegner, the company’s General Counsel, owns a stake worth $1.2 billion.
While Tether is currently enjoying its success, looming regulatory changes in the form of stablecoin regulations could alter the landscape. The European Union has already implemented such regulations in May, providing an opportunity for more compliant players like Circle or even traditional banks to gain ground. Additionally, Tether may face obstacles if USDT holders demand money market returns, which are currently between 4-5%. Forbes has learned that some U.S. companies are exploring the creation of regulated stablecoins that offer money-market-esque returns. Tether’s founders have profited immensely from its customers, but at some point, the company may have to face the consequences.
As Tether continues to navigate an evolving regulatory landscape and increasingly demanding market, the fate of the stablecoin giant hangs in the balance. Its lucrative success and the fortunes of its management team are intertwined with industry developments and the confidence of its customers.
[Insert Image Caption: Wolfgang Wilde for Forbes]
Additional Forbes Articles:
1. Inside Tether, Crypto’s (So Far) Unbreakable Buck – By Steven Ehrlich
2. This Health AI Startup Aims To Keep Doctors Up To Date On The Latest Science – By Katie Jennings
3. TikTok Has Pushed Chinese Propaganda Ads To Millions Across Europe – By Iain Martin
4. AI Chatbots Are The New Job Interviewers – By Rashi Shrivastava
5. Desperately Faking Riches: Inside A Hong Kong Businessman’s Outlandish Efforts To Get On The Forbes Billionaire List – By Robert Olsen