Tether, the world's largest stablecoin USDT issuer, released its second quarter 2024 financial report on July 31, stating that Tether's net profit in the first half of this year reached a record high of US$5.2 billion. Among them, the second quarter (April to June) operating net profit reached 1.3 billion US dollars, a new high, which can be said to be full of cash.
Net profit surpassed BlackRock last year
Looking back at last year, Tether's net profit in 2023 reached US$6.2 billion, accounting for 78% of Goldman Sachs's net profit (US$7.9 billion); 72% of Morgan Stanley's net profit (US$8.5 billion), and It surpassed asset management giant BlackRock's net profit of US$5.5 billion.
It is worth mentioning that Tether is a company with only about 100 employees, which means that for the entire year of 2023, each Tether employee brought an average net profit of US$62 million to the company.
In comparison, Goldman Sachs, Morgan Stanley and BlackRock have 45,000, 80,000 and 20,000 employees respectively. It can be seen that the ability of Tether employees to create wealth for the company far exceeds that of traditional financial institutions.
The shadow dollar that weaves underground finance
Although Tether’s wallet is full of profits, the Wall Street Journal published a long article on the 10th, titled “ The Shadow Dollar Weaving the Underground Financial World—Tether ,” which describes how the stablecoin USDT issued by Tether has successfully entered the market. Integrate into the global financial system, but at the same time disrupt the global sanctions system.
The article begins by saying that USDT is an unregulated and large-scale currency that is undermining the United States’ fight against arms dealers, sanctions violators, and fraudsters, and that the currency’s daily transaction volume is as high as $190 billion.
Because USDT is pegged 1:1 to the U.S. dollar and can operate without supervision by U.S. law enforcement agencies, it is used as a trading tool by many illegal and sanctioned individuals. In addition, in areas where the U.S. government restricts the use of the U.S. dollar system, such as Iran, Venezuela, and Russia, USDT has achieved great growth as a stealth dollar and is often used for cross-border fund transfers.
Although European and American countries are currently planning to take many measures to limit the wild growth of USDT, such as Europe's crypto-asset law "Mica"; the United States' "Stable Currency Act", and Tether will also cooperate with the United States OFCA to freeze the Specially Designated Nationals List (SDN) Related wallets. However, it remains to be seen whether these measures can shake USDT’s underground financial status.
S&P ratings Tether approaching the most dangerous level
On the other hand, the American consumer protection organization Consumers' Research also issued a warning to the stablecoin issuer Tether in a report released yesterday (12th), accusing Tether of a lack of transparency in its U.S. dollar reserves. The report pointed out that this lack of transparency The transparency situation is similar to the one that led to FTX's collapse.
The report also mentioned that S&P Global Ratings, one of the three major credit rating agencies, rated USDT as level 4 (level 1 is the most stable and level 5 is the least stable) in the 2023 "Stablecoin Stability Assessment". The reason is that USDT reserves are not transparent. S&P analysts noted:
Tether is currently not explicitly regulated by any authority, and there are no specific regulations on how or where its reserves can be invested.
Extended reading: S&P rated stablecoins for the first time" USDC received a level 2 rating, while USDT was only rated level 4 "limited" by transparency issues
Finally, the report accuses Tether of doing business with criminals and failing to effectively prevent illegal institutions from using USDT to evade international sanctions.
Tether transparency progress
Although USDT is indeed abused by criminals, Tether has recently made improvements to address these issues:
- Tether hired former Chainalysis chief economist Philip Gradwell in July this year to enhance transparency and produce USDT usage reports. These reports will be provided to U.S. regulators and investors to help reveal the actual uses of stablecoins.
- Then in August, Tether CEO Paolo Ardoino announced that since 2014, the company had assisted more than 145 law enforcement agencies in recovering $108.8 million in USDT related to illegal activities.
- In the first half of September, Tether also announced that it would cooperate with Tron to establish a financial crimes unit. The new agency, called the “ T3 Financial Crimes Unit ,” will focus on identifying and freezing illegal USDT transactions on the Tron network, which is the blockchain platform with the largest USDT transaction volume.
