Ripple CEO Brad Garlinghouse Says It's Clear The US Is ''Going After'' Tether

Ripple CEO Brad Garlinghouse Says It’s Clear The US Is ”Going After” Tether

Updated: 13 May 2024

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It’s clear that the US is ”going after” stablecoin issue Tether, and the outcome of such action on the crypto ecosystem is difficult to predict, said Ripple CEO Brad Garlinghouse.

Tether is a ”very important” part of the crypto industry and Garlinghouse said the regulatory action against it by the Securities and Exchange Commission will be ”an interesting one to watch.”

There is a “100%” chance of another crypto market black swan event on the scale of the collapse of FTX, Garlinghouse added in a May 10 episode of the World Class podcast, without linking that to the action against Tether

Garlinghouse’s comments come as Ripple plans to launch its own dollar-backed stablecoin to rival market leaders Tether USDT and USD Coin (USDC). Set to debut later this year, the stablecoin will be deployed on the XRP Ledger and the Ethereum blockchain.

The Ripple CEO said that the launch of a stablecoin is the next natural step for the crypto company as it aims to win a share of the booming stablecoin market that is projected to soar past $2.8 trillion by 2028.

1/ The stablecoin market is booming – around $150B today, and projected to soar past $2.8T by 2028. There's a clear demand for trust, stability, and utility.

That's why later this year we’re launching a stablecoin pegged 1:1 to the USD on the XRP Ledger and Ethereum.…

— Ripple (@Ripple) April 4, 2024

Tether’s Reserves And Role In Terrorism Financing Brought Into Question

Over the past few years, Tether has been a popular target for critics in the Web3 industry. Many question whether the company actually holds the required amount of collateral to back its digital dollar.

Speculation around Tether’s reserves reached a climax when the Commodity Futures Trading Commission said the company “misrepresented to customers” its holdings. Court findings revealed that Tether held enough fiat to back “only 27.6% of the days” between the middle of 2016 and early 2019.

Tether subsequently paid a $41 million fine. It started releasing quarterly third party audits of its reserves over the past couple of years as well. With doubts about the company’s reserves still present, concerns of USDT’s role in terrorism financing have also started to emerge.

U.S. Senator Cynthia Lummis and Representative French Hill sent a letter in October 2023 urging the Department of Justice (DoJ) to perform an investigation into Tether and Binance. Lummis asked the DoJ to “carefully evaluate the extent to which Binance and Tether are providing material support and resources to support terrorism.”