Ripple CEO: US Government Targeting Tether

Brad Garlinghouse, CEO of Ripple, has asserted that the United States government is unequivocally "going after" Tether, the stablecoin issuer, a move that could have unforeseeable consequences for the crypto markets.

Speaking on the World Class podcast on May 10, Garlinghouse expressed certainty that another crypto-related black swan event akin to the FTX scandal was imminent. He highlighted the U.S. government's apparent focus on Tether as a significant factor contributing to market uncertainty.

Garlinghouse on Tether: Navigating Regulatory Uncertainty in the Crypto Landscape

Garlinghouse refrained from explicitly labeling potential U.S. action against Tether as the next black swan event but emphasized its importance in the evolving crypto landscape. He described Tether as a vital component of the ecosystem, acknowledging its potential vulnerability to regulatory scrutiny.

Garlinghouse admitted uncertainty regarding the potential repercussions of regulatory action against Tether on the broader crypto ecosystem. He underscored the importance of monitoring developments closely, emphasizing the significance of Tether within the crypto space.

Ripple's Stablecoin Plans: A Response to Regulatory Uncertainty

The discussion coincides with Ripple's plans to introduce its own stablecoin later this year. Ripple aims to back its stablecoin with dollar deposits, short-term government Treasurys, and other cash equivalents, according to Ripple's chief technology officer David Schwartz.

Tether Under Scrutiny: Transparency Concerns and Regulatory Criticism

Tether Holdings Limited, the parent company overseeing the issuance and management of the USDT stablecoin, has faced criticism and regulatory scrutiny in recent years. Concerns have been raised regarding its lack of transparency regarding reserve holdings and allegations of misleading customers about reserve adequacy.

DOJ Investigation: Tether's Alleged Concealment of Crypto-Linked Funds

Reports indicate that the U.S. Department of Justice, led by Manhattan-based U.S. Attorney Damian Williams, has been investigating Tether's alleged concealment of crypto-linked funds from banks. Tether has faced previous regulatory penalties, including a $41 million fine from the Commodity Futures Trading Commission for misrepresenting reserve holdings.

Garlinghouse's remarks underscore the growing regulatory scrutiny facing stablecoin issuers like Tether and the potential implications for the broader crypto ecosystem. With Ripple also venturing into stablecoin issuance, the regulatory landscape remains a focal point for industry participants navigating evolving regulatory dynamics.