How Crypto Giant Tether’s New CEO Is Remaking The Company For The Apocalypse

Forbes

With $111 billion in assets and $6 billion in profits, shadowy stablecoin merchant Tether has emerged as crypto’s most profitable company. Now it's restructuring, moving into bitcoin mining, AI and education.  Read the full story on Forbes: https://www.forbes.com/sites/ninabambysheva/2024/05/09/how-crypto-giant-tethers-new-ceo-is-remaking-the-company-for-the-apocalypse/?sh=42c9bb6765d2  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 Here's your Forbes Daily Briefing for Monday, May 13.

00:05 Today on Forbes, how crypto giant Tether's new CEO is remaking the company for the apocalypse.

00:13 While much of the crypto world crashed and burned during the recent market downturn,

00:18 reeling from the collapse of FTX and other giants, Tether has thrived.

00:23 The market capitalization of its stablecoin, USDT, ballooned to $111 billion, triple that

00:31 of its nearest rival, USDC, issued by Boston-based Circle.

00:37 Thanks to higher interest rates on U.S. Treasuries, which form the bulk of the reserves backing

00:41 its digital stablecoins, Tether is in an enviable position because its source of capital is

00:47 effectively free.

00:49 Unlike traditional banks, customers who deposit hard currency with Tether in exchange for

00:54 the tokens earn no interest.

00:56 For the first quarter of 2024 alone, Tether reported unaudited company-wide "financial

01:03 results" of $4.5 billion and a net equity of $11.4 billion.

01:09 In 2023, it reported a net profit of $6.2 billion, likely making it the most profitable

01:15 company in crypto today.

01:17 Coinbase, the largest U.S. crypto exchange, earned $95 million on $3.1 billion in revenue

01:24 in all of 2023, and for the first quarter of 2024, it had a net income of $1.2 billion,

01:31 thanks largely to the rise in crypto prices.

01:35 Approximately 20% of Coinbase's 2023 profits were generated from the interest it received

01:40 on the reserves backing stablecoin USDC, thanks to a partnership with Circle.

01:46 Plush with capital, Tether is now looking beyond stablecoins for growth.

01:50 Last month, the company, headquartered in the British Virgin Islands, announced a strategic

01:55 restructuring, branching into three new divisions beyond stablecoins - Bitcoin mining, artificial

02:01 intelligence and education.

02:04 Tether's new chief executive, Paolo Arduino, who had served as its chief technology officer

02:09 and spokesperson since 2017, says, "There is this concept of removing intermediaries

02:16 in crypto that can be applied to many other things."

02:19 Tether's planned expansion isn't just a matter of prudent diversification.

02:24 It's philosophical.

02:25 Arduino, who is 40 years old, says, "We feel like 90% of technologies, if not more,

02:32 are built for the best-case scenario, but no one is building the tech for the worst-case

02:36 scenario.

02:37 If there is a catastrophe, I'm not saying that there has to be a huge war, but anything

02:41 can happen, and we are not prepared for that."

02:45 Crypto historians will recall that Bitcoin was created by Satoshi Nakamoto in response

02:50 to the 2008 financial crisis, a time when there was widespread doubt over the stability

02:54 and trustworthiness of existing global financial systems.

02:59 Arduino believes Tether will play a big role in creating what he describes as "sovereign

03:04 technologies that can empower people."

03:06 Arduino says, "It's good to have resilient money, but if you only have resilient money

03:11 and everything else is centralized, it can be destroyed quickly.

03:15 One of our mottos is 'build for the apocalypse.'"

03:19 In December, Arduino officially took the reins at Tether.

03:22 The company's ownership structure hasn't changed, according to Arduino.

03:26 CFO Giancarlo D'Avassini is still the company's largest shareholder and former CEO Jean-Louis

03:32 Vandervelde is still involved as an advisor.

03:36 That hasn't stopped Arduino from charting Tether's new course.

03:40 Last month, the company announced its restructuring into four divisions to reflect its broadening

03:44 focus.

03:45 Finance, which manages USDT and oversees the upcoming digital asset tokenization platform.

03:51 Data, responsible for strategic investments in emerging technologies, including AI and

03:56 peer-to-peer platforms.

03:58 Power, focused on Bitcoin mining and energy-related ventures.

04:02 And Edu, to support education and leadership initiatives.

04:06 Tether has already made significant strides in each arena.

04:09 In the last year, the stablecoin giant participated in a $1 billion investment in a Bitcoin mining

04:15 operation in El Salvador, dubbed "volcano energy," even though the operations would

04:20 be powered by solar and wind energy.

04:23 It also established its own Bitcoin mine in Uruguay.

04:27 Last September, Tether revealed that it spent $420 million on 10,000 of NVIDIA's H100

04:33 graphics processing units, or GPUs, which are typically used by artificial intelligence

04:38 companies looking to crunch huge amounts of data, on behalf of German-listed Bitcoin miner

04:43 Northern Data.

04:45 In exchange for the advanced chips, Tether received a 20% stake in the company, which

04:49 intends to rent the chips to AI startups.

04:52 Another novel investment by Tether came in April, when it spent $200 million for a majority

04:58 stake in BlackRock Neurotech, a Salt Lake City biotech that creates brain implants designed

05:04 to allow people with neurological disorders or paralysis the ability to "eat, drink,

05:09 operate robotic arms, and send emails just by thinking."

05:14 For full coverage, check out Nina Bambasheva's piece on Forbes.com.

05:20 This is Kieran Meadows from Forbes.

05:22 Thanks for tuning in.

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