{"id":7856,"date":"2023-08-05T16:16:26","date_gmt":"2023-08-05T16:16:26","guid":{"rendered":"https:\/\/isafespend.com\/personal-finance\/banking\/how-to-get-rich-in-crypto-four-tether-executives-are-now-billionaires\/"},"modified":"2023-08-05T16:16:27","modified_gmt":"2023-08-05T16:16:27","slug":"how-to-get-rich-in-crypto-four-tether-executives-are-now-billionaires","status":"publish","type":"post","link":"https:\/\/isafespend.com\/?p=7856","title":{"rendered":"How To Get Rich In Crypto: Four Tether Executives Are Now Billionaires"},"content":{"rendered":"

This story appears in the August\/September 2023 issue of Forbes Magazine. <\/span>Subscribe<\/p>\n

\n

Members of the secretive management team behind the $83 billion Tether stablecoin have literally minted their own fortunes.<\/h2>\n

By <\/sub>Steven Ehrlich<\/sub> and <\/sub>Nina Bambysheva<\/sub>, Forbes Staff<\/sub><\/h4>\n

C<\/abbr>rypto is struggling. <\/strong>Under attack from regulators, the overall value of cryptocurrencies is down approximately 60% from its 2021 highs. But one digital asset company is thriving: stablecoin maker Tether. The secretive British Virgin Islands\u2013based outfit has created a digital dollar with an $83 billion market value, up from about $65 billion just a year ago. In the first three months of 2023, Tether, which is responsible for more than 50% of the entire crypto market\u2019s liquidity, says it posted a $1.5 billion profit.<\/p>\n

It employs a simple, low-risk profitmaking model: Customers give the company U.S. dollars in exchange for a blockchain-based token it mints known as USDT (the \u201cT\u201d stands for Tether). Tether holds collateral mostly in the form of Treasury bills, money market funds, bitcoin and secured loans, and earns a market return on these \u201creserves.\u201d USDTs are always supposed to be redeemable for $1 (ostensibly putting the \u201cstable\u201d in stablecoin) and redeemable on-demand, but Tether customers receive no interest on their holdings.<\/p>\n

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In March Tether benefited from the collapse of Silicon Valley Bank after it was revealed that its biggest competitor, Boston-based Circle, held more than $3 billion in uninsured deposits at SVB. Circle\u2019s dollar-pegged stablecoin briefly dropped to as low as 88 cents\u2014far enough to send nearly $10 billion worth of assets fleeing to Tether.<\/p>\n

USDC\u2019s Pain Was USDT\u2019s Gain<\/strong><\/h2>\n

Circle\u2019s USDC saw $10 billion in outflows because of exposure to Silicon Valley Bank. Much of it went to Tether\u2019s USDT.<\/h4>\n

Given its resilience and market dominance, Forbes<\/em> estimates that the company\u2014if its financials are indeed what it claims\u2014might fetch as much as $9 billion if sold. That\u2019s enough to make its top four executives billionaires. By Forbes\u2019<\/em> calculations, chief financial officer Giancarlo Devasini owns more than 40%, a stake worth $4 billion.<\/p>\n

Devasini, the company\u2019s mastermind according to multiple sources, seems an unlikely crypto billionaire. His official biography on the Bitfinex website (Tether\u2019s sister crypto exchange) paints the picture of a successful pioneer in the semiconductors market, whose business grew to 113 million euros in revenues annually before he sold it shortly before the 2008 financial crisis.<\/p>\n

But a July 2021 Financial Times<\/em> investigation found that in 2007, Devasini\u2019s business empire had just 12 million euros in sales and went into liquidation the following June. Additionally, a Devasini company called Acme was the subject of a patent infringement suit brought by Toshiba over DVD format specifications. (Tether says the lawsuit was meritless and resulted in no adverse finding.)<\/p>\n

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Meanwhile, Tether CEO Jan Ludovicus van der Velde operates as more of a figurehead responsible for maintaining high-level strategic relationships with banks and regulators. Both Devasini and Van der Velde like to stay in the background and let Paolo Ardoino, the chief technology officer, serve as the company\u2019s public face. Van der Velde and Ardoino each hold shares worth $1.8 billion. The company\u2019s general counsel, Stuart Hoegner, has a stake worth $1.2 billion. Tether did not respond to a request for comment.<\/p>\n

The company is riding high now, but if Congress passes stablecoin regulations, as the European Union did in May, it could give a leg up to a more compliant Circle, or to new entrants like banks. \u201cTypically regulation entrenches incumbents, but that may not be the case here. If it becomes profitable to have a stablecoin, why wouldn\u2019t banks enter that space?\u201d says one Democratic congressperson who requested anonymity.<\/p>\n

Another headwind could stir if USDT holders start demanding money market returns, which right now are between 4-5%. Forbes <\/em>has learned of at least one U.S. company looking to create a regulated stablecoin that would pay money-market-esque returns starting this year. When Tether kicked the money-printing machine back into overdrive during the covid-driven boom, yields were close to 0%. It is a different world now. Tether\u2019s founders have gotten rich on a free lunch served up by its customers. At some point the bill may come due.<\/p>\n

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<\/h4>\n

MORE FROM FORBES<\/strong><\/h4>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

This story appears in the August\/September 2023 issue of Forbes Magazine. Subscribe Members of the secretive management team behind the $83 billion Tether stablecoin have literally minted their own fortunes. By Steven Ehrlich and Nina Bambysheva, Forbes Staff Crypto is struggling. Under attack from regulators, the overall value of cryptocurrencies is down approximately 60% from<\/p>\n","protected":false},"author":1,"featured_media":7857,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[52],"tags":[],"class_list":{"0":"post-7856","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-banking"},"yoast_head":"\nHow To Get Rich In Crypto: Four Tether Executives Are Now Billionaires | iSafeSpend<\/title>\n<meta name=\"description\" content=\"This story appears in the August\/September 2023 issue of Forbes Magazine. 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