Tether Reduces $20 Billion Funding Goal Due to Investor Pushback: FT
Tether, known for its issuance of the USDT stablecoin, has retracted its ambitious plans to raise $20 billion in fresh capital. This decision comes after facing significant investor pushback regarding its proposed valuation of roughly $500 billion, which would position Tether among the world’s elite private companies. A recent report by the Financial Times highlighted these developments.
Tether’s Funding Goals Adjusted
Originally, Tether aimed to secure a funding round that could potentially value the company at $500 billion. However, advisers have now suggested a more realistic funding target of around $5 billion. This adjustment reflects the skepticism voiced by potential investors concerning both the size of the funding and the associated valuation.
CEO Comments on Valuation
Paolo Ardoino, Tether’s Chief Executive, clarified that the proposed fundraising figures were misinterpreted. He stated that the $15 billion to $20 billion range was intended as a ceiling rather than a specific target. Ardoino emphasized, “That number is not our goal,” highlighting the company’s strong position without reliance on external capital.
Tether’s Financial Standing
- Tether reported approximately $10 billion in profit last year.
- This profit mainly stemmed from interest earned on assets backing USDT.
- Insiders have shown reluctance to sell shares, indicating confidence in the company’s financial health.
Despite its profitability, investor concerns linger. Many are uneasy about a valuation placing Tether alongside notable firms like SpaceX and ByteDance, especially given regulatory uncertainties and ongoing questions about reserve transparency.
Scrutiny and Transparency Issues
Tether has faced continuous scrutiny regarding the quality of its reserves and its involvement in illicit activities since its inception. Although it now publishes quarterly attestations from BDO Italia, it has not conducted a full audit. Additionally, S&P Global downgraded Tether’s reserve assessment last year, citing increased exposure to volatile assets like bitcoin and gold.
Comparison with Other Companies
In defense of Tether’s valuation, Ardoino argued that its profitability stands in stark contrast to loss-making AI companies currently attracting similar valuations. He provocatively stated, “If you believe some AI company is worth $800 billion with a huge minus sign in front, be my guest.”
As Tether continues to grow, its involvement in U.S. Treasuries and gold positions it as a critical link between traditional finance and digital assets. This role is receiving considerable attention as investors assess the company’s actual worth amidst ongoing debates.
