(Kitco News) – The stablecoin space is growing increasingly contentious as the chief executives of Tether and Ripple traded accusations and allegations that the U.S. government is coming for them.
Brad Garlinghouse, the CEO of stablecoin issuer Ripple, kicked off the latest round of hostilities on May 10 when he told Chris Vasquez of the World Class podcast that after the collapse of FTX and the jailing of former CEO Sam Bankman-Fried, along with the recent conviction and sentencing of former Binance CEO Changpeng Zhao, he believes Tether is the next major crypto firm in the crosshairs of the Securities and Exchange Commission (SEC).
“Do I think there's going to be another Black Swan? Of course, one hundred percent,” Garlinghouse said. “I just don't know exactly what it is. The only one that's going to be an interesting one to watch, and I don't even know if I’d call this a Black Swan, because I feel like Black Swan by definition can't really be predicted…”
“The U.S. government is going after Tether,” he said. “That is clear to me.”
Garlinghouse said he considers Tether, which issues USDt, by far the largest stablecoin by market cap, “a very important part of the ecosystem,” and added, “I don't know how to predict the impact that will have on the rest of the ecosystem.”
Given that Garlinghouse’s Black Swan examples to support his Tether prediction included the imprisonment of the two CEOs, it was not surprising that they rubbed Tether CEO Paulo Ardoino the wrong way, and he came out swinging on Monday.
“An uniformed CEO, leading a company being investigated by the SEC, launching a competitive stablecoin (cui prodest), is being reported spreading fear about USDt,” the Tether CEO wrote in a lengthy X post. “The real facts show how Tether USDt, leveraging the transparency of the blockchain technology and working with global law enforcement is able to comply with requirements.”
Ardoino then shared a long list of Tether’s policies, actions and instances of cooperation with enforcement agencies in the United States and around the world.
“Tether collaborated, since inception, with 124 law enforcement agencies across 40+ different countries,” he said. “Tether blocked more than $1.3 billion since inception, mostly related to scams, hacks, ML. Approximately $1.6 million is related to terrorist finance. Tether collaborated, on a voluntary basis, in 198 requests from law enforcement to block wallets in the last 12 months (90 with US law enforcement), 339 in the last 3 years (158 with US law enforcement).”
“Tether cooperates directly with law enforcement agencies, while other stablecoins, although they claim to be ‘more compliant’ they require a judge order, allowing hackers, scammers and criminals a long time to move funds around,” Ardoino concluded.
Later on Monday, Garlinghouse took to X to defend his position, responding directly to Ardoino’s post.
“I wasn’t attacking Tether…the next words out of my mouth during the podcast were that I view Tether as a hugely important part of the ecosystem,” the Ripple CEO said. “My point was that the US govt has clearly indicated they want more control over USD-backed stablecoin issuers, and thus, Tether, as the largest player, is in their line of sight.”
On April 4, Ripple announced plans to launch their own competitor to USDt which will be “100% backed by US dollar deposits, short-term US government treasuries, and other cash equivalents. These reserve assets will be audited by a third-party accounting firm, and Ripple will publish monthly attestations,” they said.
“There’s clear demand for stablecoins that deliver trust, stability, and utility,” Ripple said. “To meet this growing demand, Ripple will issue a stablecoin, leveraging its decade-plus of experience building real-world financial solutions for institutions around the world.”
“This is a natural step for Ripple to continue bridging the gap between traditional finance and crypto,” said Garlinghouse at the time. “Institutions entering this space are finding success by partnering with compliant, crypto-native players and Ripple's track record and resiliency speaks for itself, as we launch new products and acquire companies through multiple market cycles. This move is also monumental for the XRP Ledger community, driving more use cases, liquidity and opportunities for developers and users.”
The stablecoin market is currently worth around $150 billion – led by Tether (USDT), which has a market cap of around $106 billion – and is forecasted to exceed $2.8 trillion by 2028.
