Brad Garlinghouse, the Ripple CEO, expressed concern over the U.S. government’s scrutiny of Tether, the leading stablecoin issuer by market capitalization.
Garlinghouse made the statement in an interview, sharing his perspective on finding success, lessons learned from Silicon Valley over the years, and XRP’s impact globally.
Garlinghouse Highlights Tether’s Regulatory Concerns
During an interview with Chris Vasquez on the World Class YouTube channel, Garlinghouse predicted another crypto-related black swan event similar to the FTX collapse and exposure of fraud involving its executives.
He then urged that it is clear that the U.S. government is pursuing Tether, the largest stablecoin issuer. While Garlinghouse did not directly label any potential U.S. action against Tether as the next black swan event, he described it as an “interesting one to watch.”
Expressing the importance of Tether within the crypto ecosystem, he emphasized his uncertainty regarding the potential impact of U.S. regulatory actions against the company.
Regarding the Securities and Exchange Commission (SEC), Garlinghouse criticized the agency’s tactics, describing the regulator as a “bully” that targets weaker entities in the crypto space through “malicious and manipulative” methods. Notably, Ripple has notched a few victories in its lawsuit filed by the SEC last July.
Despite the agency’s efforts, he remains confident in the crypto industry’s resilience against regulatory attempts. Meanwhile, he also reiterated his belief that the crypto market has the potential to reach a market cap of $5 trillion by the end of this year. He advised investors to adopt a long-term perspective, cautioning against diving straight into crypto trading.
Garlinghouse’s comments on Tether coincide with Ripple’s plans to launch its stablecoin later this year.
US Officials Investigation into Tether
The interview comes as Adewale Adeyemo, the U.S. Treasury Deputy Secretary, recently testified before the Senate Banking Committee. He noted Russia’s increasing reliance on alternative payment methods like Tether’s USDT to circumvent economic sanctions.
In October 2023, U.S. Senator Cynthia Lummis and Representative French Hill urged the Department of Justice to investigate how Binance and Tether may be providing support and resources to terrorist activities. Tether responded, stating its cooperation with law enforcement and commitment to global collaboration.
In October 2021, Tether paid a $41 million fine to the Commodity Futures Trading Commission following allegations that it had misrepresented its reserve holdings to customers. The regulator found that Tether held sufficient fiat reserves to back USDT for only 27.6% of the days between June 1, 2016, and February 25, 2019.
Tether has also continuously faced criticism for its lack of transparency regarding its backing reserves. Recently, it has sought to address these concerns by publishing quarterly third-party audits of its USDT-backing treasury.
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