Tether Abandons $20bn Target Amid Investor Resistance on Valuation

TLDR

• Tether has backed down from its initial $20bn fundraising goal after facing investor pushback.
• The company had proposed a $500bn valuation but scaled it back to $5bn due to concerns from potential investors.
• CEO Paolo Ardoino clarified that the $20bn figure was a ceiling and not a target for the company.
• Investors raised concerns over Tether’s valuation, transparency issues, and regulatory risks, leading to reduced interest.
• Despite pushback, Tether remains highly profitable, earning $10bn in profit last year from interest on assets backing USDT.

Tether has backed down from its plans to raise as much as $20 billion in fresh capital, following resistance from investors. The company, which issues the USDT stablecoin, had initially aimed to secure funds at a $500 billion valuation. However, investor reluctance over the high valuation led to a scaled-back funding target.

Tether Scales Back Funding Plans to $5 Billion

Tether’s attempt to raise funds through a private placement initially set a target between $15 billion and $20 billion. The proposed valuation would have placed Tether among the world’s most valuable private companies. However, investors raised concerns about the size of the deal and questioned the company’s valuation.

CEO Paolo Ardoino clarified that the higher figure was a ceiling rather than a target. “That number is not our goal,” Ardoino told the Financial Times. He explained that if Tether sold no shares at all, it would still be content.

In response to investor concerns, Tether’s advisers have now suggested raising a smaller amount, closer to $5 billion. This marks a significant reduction from the initial $15 billion to $20 billion plan. Prospective investors have pointed to regulatory risks and ongoing transparency issues surrounding Tether’s reserves as reasons for hesitation.

Despite the pushback, Tether’s CEO maintains that the company has “received a lot of interest” at the higher valuation. However, insiders remain reluctant to sell shares, further complicating the funding process.

Company Faces Scrutiny over Reserves and Transparency

Tether has faced long-standing scrutiny regarding the quality of its reserves and its role in illicit financial activity. While the company has started publishing quarterly attestations from BDO Italia, it has yet to provide a full audit.

Regulatory concerns and doubts surrounding reserve transparency remain key sticking points for investors. Tether’s exposure to volatile assets like bitcoin and gold led S&P Global to downgrade its reserve assessment last year.

Despite these challenges, Ardoino defends the company’s profitability. Tether generated around $10 billion in profit last year, largely from the interest earned on the assets backing USDT.

Tether continues to strengthen its presence in traditional finance markets, particularly with investments in U.S. Treasuries and gold. This growing footprint has made it a significant bridge between traditional finance and digital assets.

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