Tether (USDT)

Tether, often referred to by its currency codes USD₮ and USDT, is a cryptocurrency stablecoin launched by Tether Limited Inc. in 2014. It is pegged to the United States dollar, and is distinct from a central bank digital currency (CBDC). As of 1 August 2024, Tether reported having $118.4 billion in reserves, including $5.3 billion in excess reserves. In the second quarter of 2024, the company achieved profit of $1.3 billion, contributing to a total profit of $5.2 billion for the first half of the year. Tether Limited also disclosed a net equity of $11.9 billion, and the stablecoin's market capitalization exceeded $114 billion.

Tether is the largest cryptocurrency in terms of trading volume, holding 70% of the market share among stablecoins. In 2019, it surpassed bitcoin to become the most traded cryptocurrency globally. As of July 2024, Tether has more than 350 million users worldwide. Tether Limited is owned by iFinex, a company based in the British Virgin Islands which also operates the Bitfinex cryptocurrency exchange. As of January 2024, Tether's official website lists fourteen protocols and blockchains on which Tether has been minted. Tether faces criticism regarding the transparency and verifiability of its claimed fiat reserves.

History

Creation

In 2012, J. R. Willett published a whitepaper that described the possibility of building new cryptocurrencies on top of the bitcoin blockchain. Willett went on to help implement this idea in the cryptocurrency Mastercoin, which had an associated Mastercoin Foundation (later renamed the Omni Foundation) to promote the use of this new "second layer".^[ The Mastercoin protocol became the technological foundation of the Tether cryptocurrency, and Brock Pierce (one of the original members of Mastercoin Foundation) became a co-founder of Tether while Tether founder Craig Sellars became the CTO of the Mastercoin Foundation.

The precursor to Tether, originally named "Realcoin", was announced in July 2014 by co-founders Brock Pierce, Reeve Collins, and Craig Sellars as a Santa Monica-based startup. The first tokens were issued on 6 October 2014, on the bitcoin blockchain. Realcoin used bitcoin's computer infrastructure to exchange property and execute contracts without third-party intermediaries, opening up bitcoin's network to a variety of commercial uses. Realcoin worked with banks, digital-currency exchanges, and ATM providers to become "gateways" for buying, trading, or redeeming realcoins around the world.

On 20 November 2014, Tether CEO Reeve Collins announced the project was being renamed to "Tether". The company also announced it was entering private beta, which supported a "Tether+ token" for three currencies: USTether (US+) for United States dollars, EuroTether (EU+) for euros, and YenTether (JP+) for Japanese yen. Tether Holdings Limited is incorporated in the British Virgin Islands with offices in Switzerland, without giving details, and has never submitted to an independent audit. In July 2022, Tether started releasing quarterly attestations by the accounting company BDO Italia. According to The Wall Street Journal, "since at least 2017, Tether has been assuring investors that it will get audited, though it has yet to deliver", and the quarterly attestations are "snapshots of a company's assets held at one moment in time with less rigorous standards than audits."

In January 2015, the cryptocurrency exchange Bitfinex enabled trading of Tether on their platform. In 2018, Phil Potter, the chief strategy officer for Bitfinex, left the company after the Paradise Papers leaks in November 2017 named Bitfinex officials Philip Potter and Giancarlo Devasini as responsible for setting up Tether Holdings Limited in the British Virgin Islands in 2014. The Financial Times reported in 2022 that Devasini and Jan Ludovicus van der Velde founded two companies in 2012 and 2014, respectively, Bitfinex and Tether. Tether Limited is a fully owned subsidiary of British Virgin Islands–based Tether Holdings Limited.

For a short period, Tether managed United States dollar transactions through Taiwanese banks, which worked with Wells Fargo to enable the transfer of funds outside of Taiwan. On 18 April 2017, Tether shared that these international transfers had come to a stop. Tether issues tokens on Algorand, Avalanche, Celo, Ethereum, EOS, Liquid Network, Near, Polygon, Solana, Bitcoin Cash's Standard Ledger Protocol, Statemint, Tezos, and Tron.

There are a total of five distinct Tether tokens: United States dollar tether (USD₮) on bitcoin's Omni layer, euro tether (EUR₮) on bitcoin's Omni layer, United States dollar tether (USD₮) as an ERC-20 token, and euro tether (EUR₮) as an ERC-20 token, and added in 2020 United States dollar tether (USD₮) as a TRC-20 token on the TRON network. In August 2024, Tether announced that they would be launching a stablecoin pegged to the United Arab Emirates dirham. The dirham, like several Gulf currencies, is pegged to the United States dollar.

From January 2017 to September 2018, the amount of tethers outstanding grew from about $10 million to about $2.8 billion. In early 2018, Tether accounted for about 10% of the trading volume of bitcoin, but during the summer of 2018, it accounted for up to 80% of bitcoin volume. More than $500 million of Tether was issued in August 2018. On 15 October 2018, the tether price briefly fell to $0.88 due to the perceived credit risk as traders on Bitfinex exchanged tether for bitcoin, driving up the price of bitcoin.

The Wall Street Journal reported that in late 2018, Tether Holdings Ltd former co-owner Stephen Moore discussed efforts by a major Tether trader in China to "circumvent the banking system by providing fake sales invoices and contracts for each deposit and withdrawal", and the report quoted a Moore email in which he admitted signing these fake invoices and contracts but said he "would not want to argue any of the above in a potential fraud/money laundering case." Tether released a response calling the report "wholly inaccurate and misleading" but did not cite any specific inaccuracies.

In 2019, Tether surpassed bitcoin in trading volume with the highest daily and monthly trading volume of any cryptocurrency on the market. As of July 2021, Tether is tied to half of all bitcoin trades. Also in 2021, the company was fined by the CFTC for only maintaining full reserves during 27.6% of the days in the period from 2016 to 2018 as well as for failing to present audits showing sufficient asset reserves. In May 2022, Tether launched its MXNT token pegged to Mexico's peso as a "testing ground" in Latin America.  Also in 2022, Tether remained strong during a time when several once-reputable companies in crypto and banking collapsed. Tether's nearest competitor, Circle, experienced a faltered growth to the point where its $24 billion of USDC was worth barely more than a quarter of Tether's stash.

In October 2023, Paolo Ardoino, the chief technology officer for Tether, was promoted to CEO. He has led the company since December 2023, succeeding current CEO Jean-Louis van der Velde. In October 2023, The Wall Street Journal reported that Tether has been increasingly showing up in investigations tied to money laundering, terror financing, and sanctions evasion. Research firm Elliptic later disputed the report's accuracy, saying it has engaged with The Wall Street Journal to correct misinterpretations of the level of crypto fundraising by Hamas. In response, the company published a blog post denying inadequate customer due diligence and screening practices. It described how they have aided governments with criminal investigations, helping freeze $835 million in assets linked to theft. The company reported in 2024 that they have worked with more than 140 law enforcement offices across 45 jurisdictions to assist cases involving illicit stablecoin use.

In May 2023, Tether announced plans to establish a bitcoin mining operation in Uruguay using renewable energy and investing its resources into renewable energy production. Uruguay sources more than 98% of its electricity output from renewable energy sources, primarily wind and hydropower.  In June 2023, Tether Operations Limited held meetings with governmental structures and signed a memorandum with the Government of Georgia. The partnership will create a special fund for local startups and aid in developing blockchain technologies in Georgia.

In November 2023, Tether announced that it plans to invest about half a billion dollars over the next six months to become one of the world's top bitcoin miners. That investment includes part of a $610 million credit facility that Tether had extended to publicly traded bitcoin mining company Northern Data AG after acquiring shares in the Frankfurt-based firm in September. In December 2023, Lugano, Switzerland, started to accept cryptocurrencies, including the Tether stablecoin, for paying taxes, fines, and all other invoices.  According to a report by blockchain analytics company TRM Labs, Tether was the most used stablecoin for criminal activity throughout 2023, having been connected to $19.3 billion in illicit transactions. The amount was larger in the previous year, with $24.7 billion worth of transactions linked to criminal activity in 2022.

According to comments made in January 2024 by Cantor Fitzgerald CEO Howard Lutnick, that company was acting as custodian for Tether's reserves. During a February 2024 Congressional hearing, Minnesota Congressman Tom Emmer, a cryptocurrency supporter, called The Wall Street Journal's October 2023 article "erroneous", observing that federal reports on global financial crimes showed the actual amount of cryptocurrency used by these groups to be "significantly smaller" than what was reported by media outlets.

In the first quarter of 2024, Tether's profit was $4.52 billion. U.S. Treasury securities were a major contributor to its net profits. Tether also profited from its positions in gold and bitcoin. Tether announced in April 2024 that they invested $200 million from their excess reserves into Blackrock Neutro, a U.S. based brain-chip company that makes brain-to-computer interfaces, including neural implants that can allow people to control computers and prosthetic arms without moving.

In May 2024, Tether announced it would restructure into four divisions focused on artificial intelligence, bitcoin mining, education, and stablecoins. According to Ardoino, the company's ownership structure had not changed. Also in 2015, Tether acquired a $100 million stake in Bitdeer, a bitcoin miner that split from Bitmain, via a private placement, with options to acquire another $50 million at $5.00 per share. In July 2024, Tether, Tron, and blockchain analysis firm TRM Labs formed an alliance intended to curb illicit spending on the Tether and Tron blockchains. As of September 2024, the T3 Financial Crime Unit had frozen about $12 million in USDT linked to scams and fraud, and had identified eleven victims.

Tether reported in August 2024 that their profit during the first half of the year was $5.2 billion, with a net operating profit of $1.3 billion during the second quarter alone. Tether also reported that it holds more than $97.6 billion in U.S. Treasuries, making them one of the largest buyers of Treasury bills in the world, more than many countries. In October 2024, The Wall Street Journal reported Tether was the target of a federal criminal investigation for possible violations of sanctions and anti-money-laundering rules. In December 2024, Tether announced a $775 million investment in Rumble, an alternative video hosting platform known for its predominantly right-wing user base. In September 2025 former Trump administration official Bo Hines was named CEO of Tether U.S, the company's US arm.