Ripple CEO Brad Garlinghouse has voiced his belief that the United States government is actively pursuing stablecoin issuer Tether, signaling potential turbulence ahead for the cryptocurrency markets.
Speaking on a recent episode of the World Class podcast on May 10, Garlinghouse asserted that it’s “clear” the U.S. government is targeting Tether, though he refrained from speculating on the specific actions the authorities might take. He described Tether’s situation as “interesting to watch” and emphasized its significance within the crypto ecosystem.
“Tether is a vital part of the ecosystem,” Garlinghouse noted, expressing uncertainty about the potential repercussions of regulatory action against Tether on the broader crypto landscape.
Tether Holdings, the parent company overseeing the issuance and management of the Tether (USDT) stablecoin, has faced scrutiny from U.S. lawmakers in the past. In October 2023, Senator Cynthia Lummis and Representative French Hill urged the Department of Justice to investigate potential links between Tether and terrorist financing.
In response, Tether asserted its commitment to cooperating with law enforcement and emphasized its ongoing efforts to work with authorities globally.
Reports surfaced in November 2022 suggesting that U.S. Attorney Damian Williams had taken over a Justice Department investigation into Tether’s alleged concealment of crypto-linked funds from banks.
Tether has also faced criticism for its lack of transparency regarding the reserves backing USDT. Despite publishing quarterly third-party audits in recent years, the company paid a $41 million fine to the Commodity Futures Trading Commission in October 2021 for misrepresenting its reserve holdings.
Meanwhile, Ripple, the blockchain firm led by Garlinghouse, is gearing up to launch its own U.S. dollar stablecoin later in 2024. Ripple’s Chief Technology Officer, David Schwartz, revealed plans to back the token with dollar deposits, short-term government Treasurys, and other cash equivalents.