Tether: The Stablecoin Issuer That's Poised to Take Over the World

Tether, the top stablecoin issuer in the crypto industry, seems to be moving in the direction of taking over the world. And I'm all for it!

Crypto industry’s top stablecoin issuer, Tether, seems to be on a mission to take over the world. And I’m all for it!

Two days ago, the company made a surprising announcement that it just bought a 9.8% stake in Latin American agricultural giant Adecoagro. The purchase was worth around $100 million.

Adecoagro is one of Argentina’s largest milk producers, handling over 550,000 liters of milk daily. It also runs sugarcane fields spanning more than 193,000 hectares in Brazil, producing ethanol and refined sugar.

Plus, they’re into renewable energy too.

Tether’s getting into the real world, not just limiting itself to crypto. And by all accounts, it is also sitting on a fat pile of cash.

As of August, Tether’s reserves were around $118.4 billion, with $5.3 billion in excess reserves. The company also made a cool $5.2 billion in profit just from the first half of the year. It’s insane!

Tether’s market cap is at $114 billion, and it has been flexing its financial muscles all year. Now let’s talk about what these guys are planning and where they even came from.

The origin

Tether was not always “Tether.” In 2014, it started as Realcoin, in Santa Monica. Brock Pierce, Reeve Collins, and Craig Sellars were behind it, with the first tokens launched on Bitcoin’s blockchain in October 2014 using the Omni Layer Protocol. 

Realcoin used Bitcoin’s infrastructure for things like contracts and exchanges, trying to take advantage of Bitcoin’s unprecedentedly strong security. 

Tether’s founders had big plans, too. They wanted to work with banks, exchanges, and ATM providers to make their vision work globally.

However, by November 2014, they ditched the Realcoin name and went with Tether. Then, things really took off. The company issued three main tokens backed by fiat currencies—USD Tether (US+), Euro Tether (EU+), and Yen Tether (JP+). 

At the time, it was not backed by any independent audits. Tether was incorporated in the British Virgin Islands and set up offices in Switzerland, but unfortunately, it didn’t show much transparency.

Tether’s big boom

Between 2015 and 2018, Tether exploded in size. It was listed on Bitfinex, and from 2017 to 2018, the amount of Tether tokens grew from $10 million to $2.8 billion.

During that time, Tether accounted for about 80% of Bitcoin trading volume, and people used it everywhere to swap into crypto.

Of course, this kind of growth draws a lot of unwanted attention.

By 2018, when Tether’s price dropped to $0.88 briefly, it scared a lot of traders. There were concerns about credit risks, and people started dumping their Tether for Bitcoin.

Later in 2018, things got worse. The Wall Street Journal reported that one of Tether’s owners, Stephen Moore, was involved in using fake invoices and contracts to get around banking rules in China. Tether’s reputation took a hit, and it released a statement calling the Journal’s claims inaccurate and misleading. 

That worked as well as you’d imaginee. 

Tether today

In 2019, Tether overtook Bitcoin in trading volume, and by 2021, it was responsible for about half of all Bitcoin trades. That’s wild. But it’s also drawn the attention of regulators.

Tether got fined for not having full reserves during 2016–2018 and for failing to show proof of its assets. The company claimed that all its tokens were backed 1-to-1 by fiat currency. 

But when it revised this in 2019, it turned out that Tether was only 74% backed by actual reserves. The rest? Receivables and other assets.

In 2021, the company settled a lawsuit with the New York Attorney General’s office for $18.5 million without admitting wrongdoing. It wasn’t a great look, but the company kept pushing forward.

“I’ve been vocal about my concerns regarding regulations that require stablecoins to hold significant reserves in uninsured cash deposits. Such mandates could endanger the financial stability of those relying on USDT, and I believe there are better ways to ensure safety without compromising access for millions of users.”

— Paolo Ardoino

While other crypto companies struggled in 2022, Tether emerged