Ripple CEO says the U.S. government is going after Tether

Ripple CEO Brad Garlinghouse has expressed concern over potential U.S. regulatory actions targeting Tether. Speaking on a May 10 episode of the World Class podcast, Garlinghouse described the situation as “one to watch.”

Garlinghouse did not speculate on whether U.S. actions could lead to a market destabilizing event but acknowledged the possibility of consequential market impacts.

Further, Garlinghouse said that he is “100%” sure that another crypto-related black swan event like the collapse of FTX could transpire in the crypto sector.

Tether’s issues with transparency

Tether Holdings Limited, the parent company of Tether, manages the world's largest stablecoin by market capitalization through a global network of subsidiaries. 

Tether has faced constant scrutiny over its operational transparency since its inception. This includes challenges related to the true extent of its reserve holding, which supports the value of its stablecoin, USDT.

In October 2023, U.S. Senator Cynthia Lummis and Representative French Hill prompted the Department of Justice to assess the involvement of Binance and Tether in potentially supporting terrorism. 

Tether responded by affirming its cooperation with law enforcement agencies and its commitment to global regulatory compliance.

Further complicating matters for Tether, in November 2022, Manhattan-based U.S. Attorney Damian Williams took charge of an ongoing investigation into the company's alleged efforts to hide crypto-linked funds from its banking partners.

Back in 2021, Tether also paid a $41 million fine to the Commodity Futures Trading Commission. 

The penalty was imposed because Tether had given incorrect information about its reserve holdings. It only had enough fiat reserves to back its USDT on 27.6% of the days between June 1, 2016, and Feb. 25, 2019.

This led to calls for more rigorous third-party audits, which Tether has started to publish quarterly.