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Source: Tenor

Related: Kraken Confrontation vs. SEC Regulatory

Ripple CEO Brad Garlinghouse said Uncle Sam is on a witch hunt for Tether

On the World Class podcast, he predicted with the same certainty as a weatherman forecasting rain in a monsoon, that we’re due to witness another crypto catastrophe soon,  like the one that happened with the FTX debacle. According to him, it’s not a question of ‘if’ but ‘when’ the crypto world gets hit by its next scandalous comet. 

The Ripple boss mentioned it is apparent the U.S. government is targeting Tether, though he did not elaborate or imply that any potential U.S. action against Tether would be the next black swan event. Instead, he referred to it as an “interesting one to watch.” He emphasized that Tether is a crucial component of the crypto ecosystem, but he admitted he could not predict the impact of potential U.S. regulatory actions against Tether on the broader crypto market.

Ripple is also  Launching a Stablecoin to Rival Tether

Garlinghouse’s remark coincides perfectly with Ripple’s plan to roll-out their very own stablecoin in 2024. Ripple’s foray into the stablecoin arena is sure to be a riveting spectacle given that the United States Securities and Exchanges Commission is going after Tether, and only a few days ago, the SEC mentioned that there was no guarantee Ripple would not break financial regulations in future. 

It is impossible to speculate how the commission will respond to a Ripple stablecoin but it is 100% clear that law enforcement are investigating the largest stablecoin, Tether, on matters to do with facilitating terrorism financing.

Tether’s  Legal Woes

U.S. Senator Cynthia Lummis and Representative French Hill wrote a strongly worded letter to the Department of Justice in October 2023. The mission? To implore the Department of Justice (DOJ) to scrutinize Binance and Tether, apparently suspecting these financial entities of supporting  terrorist financing. 

Source: Tenor

Meanwhile, Tether was like “Why !? we’ve always assisted law enforcement!” they proclaimed, perhaps while batting innocent eyelids. You can almost picture Tether as a pious nun, halo firmly in place, swearing on a stack of holy ledgers that they have nothing but pure “*smart-contracts driven*” intentions.

Tether wrote a response telling law enforcers that it had always been commited in assisting regulators across the world, and would always be commited to do so in future. 

A Bloomberg report dated November 2022 said Damian Williams, a New York Attorney, swooped into an ongoing Justice Department investigation. 

Source: Tenor

His mission was to unravel the mystery of Tether’s not-so-houdini act of making crypto-linked funds disappear from the prying eyes of the very banks helping it shuffle its digital dollars. It seemed that Tether could have been playing a high-stakes game of hide-and-seek with its cash, which Williams was ready to shout ‘game over’

Tether is playing peekaboo with its reserve transparency rather than actually showing the full hand regarding its reserves for backing USDT. Despite the occasional nod to accountability with quarterly third-party audits, skeptics might say it’s more a case of “now you see it, now you don’t.”

In October 2021, Tether took out its wallet and coughed a staggering $41 million as fine payments to the Commodity Futures Trading Commission. It turned out that their reserve, which should be as solid as a rock, was more like a part-time gig. In fact, it was fully backed with cold, hard cash for 27.6% of the period between June 2016 and February 2019.

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When the sky comes falling down on Tether, Ripple is like “Hey Brother!There is nothing in this world I wouldn’t do to make you replaceable with an upcoming Ripple Stablecoin for the U.S dollar backed by short-term government treasurys, dollar deposits and cash equivalents.

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