Tether

Tether (USDT) is a stablecoin issued by Tether Limited and related companies, designed to hold a value of one US dollar. It began in 2014 as Realcoin, a token on the Omni Layer of Bitcoin, and now runs on many blockchains, including Ethereum and Tron.¹² Tether shares owners and executives with the exchange Bitfinex.³ Its claim that each token was backed by a dollar in reserve led to settlements with the New York Attorney General in 2021 and the US Commodity Futures Trading Commission (CFTC) in the same year.⁴⁵ Its reserves are now held mostly in US Treasuries, with smaller amounts in gold and bitcoin.⁶

HistoryReport an error

Realcoin

On 9 July 2014 Brock Pierce announced Realcoin, a token to be backed one for one by US dollars held in reserve. It was built on Mastercoin, a protocol that adds a layer on top of the Bitcoin blockchain. The announcement also involved Reeve Collins, an advertising entrepreneur, and Craig Sellars of Mastercoin.⁷ On 20 November 2014 the project was renamed Tether as it entered private beta. Collins was its chief executive and Sellars, a co-founder, was also chief technology officer of Mastercoin. Bitfinex, then based in Hong Kong, was among the first exchanges to sign on.¹ Pierce's founding team, which also included William Quigley, stepped away from the project early on.⁸

Bitfinex and shared management

Tether and Bitfinex have overlapping owners and managers. The CFTC found that they "shared common ownership, leadership, management, employees and operational resources", with the same individuals serving as chief executive, chief financial officer, chief technology officer and general counsel of both.³ Jean-Louis van der Velde was chief executive of Tether until October 2023 and remained chief executive of Bitfinex.⁹ Giancarlo Devasini, who was running Bitfinex in 2014, was by 2023 Tether's chief financial officer.⁸ Paolo Ardoino, whom Devasini hired after they met in 2014, became chief technology officer of both companies, and was promoted to chief executive of Tether on 13 October 2023 while remaining Bitfinex's chief technology officer.⁹⁸ Stuart Hoegner was general counsel to both.¹⁰

In April 2017 Bitfinex's parent iFinex and Tether sued Wells Fargo, which had stopped processing outgoing wire transfers from four Taiwanese banks used by Bitfinex. The suit was withdrawn on 11 April, about a week after it was filed.¹¹¹² The CFTC later found that from May 2017 Tether held some reserve money in an account in the name of its general counsel, and from June 2017 in Bitfinex's own accounts.³ In November 2017 the Paradise Papers leak showed that Devasini and Philip Potter, both Bitfinex executives, were also beneficial owners of Tether. The companies said they had already disclosed this in an April 2017 court filing.¹³

Auditor and banking problems

Tether hired the accounting firm Friedman LLP in May 2017.¹⁴ In September 2017 a preliminary report by Friedman stated that Tether held $442.9 million in cash, matching the tokens then in circulation. It was not an audit.¹⁵ The CFTC later found that the review covered a single date chosen in advance by Tether, and that Bitfinex moved $382 million into Tether's newly opened bank account that day.³ On 27 January 2018 Tether said its relationship with Friedman had "dissolved" and that an audit was "unattainable in a reasonable time frame".¹⁵¹⁴

Bitfinex from about 2014, and Tether from October 2017, relied on a payment processor registered in Panama, which the New York Attorney General identified as Crypto Capital, to hold customer money, and from August 2018 some of Tether's reserves.⁴³ In April 2018 media reported that authorities had seized funds held by the processor, and Bitfinex had growing difficulty withdrawing money it had placed there.³ In November 2018 Tether moved $625 million of reserve funds to Bitfinex, later formalised as a credit facility.³

New York and CFTC cases

On 25 April 2019 the New York Attorney General announced a court order against iFinex, alleging that Bitfinex had lost about $850 million held with Crypto Capital and had used Tether's reserves to cover the shortfall without telling investors. Bitfinex said the filings were written in bad faith and contained false assertions.¹⁶ In an affidavit days later, Hoegner said that cash and short-term securities backed about 74% of tethers in circulation.¹⁰

On 23 February 2021 the companies settled. They agreed to pay $18.5 million, stop trading with New Yorkers, and for two years publish quarterly reports on the categories of assets backing USDT. They neither admitted nor denied the Attorney General's findings, which said Tether's claim of full dollar backing had been false and that for periods it held no reserves.⁴¹⁷

On 15 October 2021 the CFTC fined Tether $41 million and Bitfinex $1.5 million. It found that between 2 September 2016 and 1 November 2018 Tether held enough fiat in its own bank accounts to back the tokens in circulation on only 27.6% of days. It also found that the reserves had never been audited. Tether settled without admitting or denying the findings.⁵³ Tether told the CFTC that it had never failed to honour a redemption request.³

Chains

Tether first issued tokens on Omni. On 11 September 2017 it launched ERC-20 tokens on Ethereum, with contracts built by Ethfinex.¹⁸ On 4 March 2019 it announced a TRC-20 version on Tron; at that time almost all USDT was still on Omni.¹⁹ Tether later issued USDT on more than a dozen chains, including Solana, Avalanche, TON, Aptos and NEAR.²

On 17 August 2023 Tether stopped issuing USDT on Omni, Kusama and the Bitcoin Cash SLP protocol, citing low use.²⁰ In July 2025 it said it would end redemptions on these chains and on EOS and Algorand from 1 September 2025, and freeze the remaining tokens.²¹ In September 2026 Ardoino said USDT was "coming home" to Bitcoin through Utexo, a Tether-backed project using the RGB protocol.²² On 22 October 2026 Utexo opened early access to a bridged version of USDT on a Bitcoin test network, with a public launch scheduled for 28 November 2026.²³

Relocation and the US market

On 13 January 2025 Tether said it would move its group headquarters to El Salvador, after two Tether companies received licences from the country's digital asset regulator. Most of its entities had reportedly been incorporated in the British Virgin Islands.²⁴

The US GENIUS Act, signed on 18 July 2025, set federal rules for stablecoins, requiring them to be backed by liquid assets such as dollars and short-term Treasuries, with monthly reserve disclosure.²⁵ On 12 September 2025 Tether announced USAT, a separate dollar stablecoin for the US market, to be issued by the federally chartered Anchorage Digital Bank, with reserves managed by Cantor Fitzgerald. Bo Hines, formerly executive director of the White House crypto council, was named chief executive of the US business.²⁶ USAT launched on 27 January 2026.²⁷

USDT itself is a foreign-issued stablecoin under the Act. As of July 2026, CoinDesk estimated from Tether's disclosures that up to a quarter of its reserves were in assets, such as gold, loans and bitcoin, that did not meet the Act's standards, and lawyers disagreed on whether Tether must comply by January 2027 or July 2028.²⁸

Reserves and attestationsReport an error

Tether did not publish a breakdown of its reserves until May 2021, under the New York settlement. As of 31 March 2021 about 76% of reserves were in cash, cash equivalents and commercial paper, with commercial paper making up 65% of that group. Secured loans were 12.55%.²⁹ After the 2022 market stress Tether reduced its commercial paper, and on 13 October 2022 said it held none, having replaced it with US Treasury bills.³⁰³¹

On 17 May 2023 Tether said it would put up to 15% of realised profits into bitcoin. It also held gold in its reserves.³² By the end of 2025 its attestation listed $122 billion in direct Treasury holdings, $17.4 billion in gold and $8.4 billion in bitcoin, against $186.5 billion in liabilities.⁶ In the second quarter of 2026 the value of its bitcoin and gold fell, and its excess reserves halved from $8.2 billion to $4.1 billion even though it added 14 tonnes of gold.³³

Reserve reports were prepared as attestations, which check balances at a single point in time, not as audits. Two Cayman Islands firms, Moore Cayman and MHA Cayman, produced them until 2022, when Tether moved to BDO Italia.³⁴ In November 2025 S&P Global Ratings cut its assessment of USDT's ability to hold its peg from "constrained" to "weak", its lowest score, citing bitcoin exposure and limited disclosure. Tether rejected the assessment.³⁵

On 24 March 2026 Tether said it had engaged a Big Four firm for its first full audit; the Financial Times reported that it was KPMG.³⁶³⁷ On 13 August 2026 Tether said KPMG had issued an unqualified opinion on Tether International's financial statements for the year ended 31 December 2025, which a KPMG spokesperson confirmed. Tether had not said whether it would publish KPMG's findings.³⁸

Profits and investmentsReport an error

Tether reported group net profit of $13 billion for 2024, about $7 billion of it from its Treasury and repo holdings, and more than $10 billion for 2025.³⁹⁶ It invests profits and excess reserves through Tether Capital, which describes stakes in artificial intelligence, energy, commodities, digital media and sport.⁴⁰

In September 2025 Bloomberg reported that Tether sought to raise up to $20 billion at a valuation of about $500 billion.⁴¹ In February 2026 the Financial Times reported that advisers had cut the figure to about $5 billion after investor resistance.⁴² Tether, which owned more than 10% of Juventus, made an all-cash bid for the club's controlling stake in December 2025. Exor, the majority owner, rejected it.⁴³⁴⁴

Incidents and controversiesReport an error

• Market manipulation research. In a paper published in the Journal of Finance in 2020, John Griffin and Amin Shams reported that Tether purchases during the 2017 boom tended to follow market falls, came from a single entity, and preceded large bitcoin price rises, which they found consistent with unbacked money inflating prices.⁴⁹ Tether called the 2019 version of the paper "flawed" and said tokens were issued on demand, not to move prices.⁵⁰ A 2018 study by Wang Chun Wei found that Tether issuance did not predict later bitcoin returns.⁵¹
• 2022 run. After the collapse of Terra's UST, USDT fell to about $0.95 on 12 May 2022 before recovering. Tether said it processed about $10 billion of redemptions from 11 to 23 May.³⁰⁵²
• Celsius lawsuit. Celsius sued Tether over the liquidation of about 40,000 bitcoin it had pledged as loan collateral in June 2022.⁵³ Tether settled for $299.5 million in October 2025.⁵⁴
• Illicit use. In January 2024 the UN Office on Drugs and Crime said USDT on Tron was popular with money launderers in East and Southeast Asia. Tether said the report ignored its law enforcement work.⁵⁵ On 28 September 2026 Democrats on a Senate subcommittee, led by its top Democrat, Senator Richard Blumenthal, said USDT had become "a significant financial lifeline" within Iran's shadow banking network. Ardoino replied that Tether's actions had cut Iran-linked stablecoin volumes by 94%.⁵⁶⁵⁷
• Political ties. In October 2026 Blumenthal wrote to Cantor Fitzgerald, which manages Tether's US reserves, asking about its relationship with Tether. Cantor was formerly led by Commerce Secretary Howard Lutnick and is now run by his son Brandon.⁵⁸³⁶

Freezing and law enforcementReport an error

USDT contracts let Tether freeze addresses, blocking transfers from them.⁴⁵ In December 2023 it began freezing addresses on the US Treasury sanctions list voluntarily.⁴⁶ With Tron and TRM Labs it formed the T3 Financial Crime Unit, which said it had frozen $300 million in its first year. Ardoino said Tether worked with more than 280 law enforcement agencies.⁴⁷ By July 2026 Tether had frozen about $475 million in USDT linked to Iran's central bank.⁴⁸

TimelineReport an error

See alsoReport an error

• USDC, the main competing dollar stablecoin
• Terra
• Bitcoin
• Ethereum

ReferencesReport an error