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Ripple CEO Points to US Government's Increasing Scrutiny of Tether

Ripple CEO foresees US Government action against Tether

Ripple's CEO Brad Garlinghouse highlights the US government's targeted approach towards Tether, predicting significant impacts on the crypto landscape.

Key takeaways:

  • Brad Garlinghouse, CEO of Ripple, asserts that it is "clear" the US government is targeting Tether, indicating potential regulatory actions ahead.
  • Garlinghouse predicts another significant disruption in the crypto market, akin to the FTX collapse, with Tether's situation being a critical development to monitor.
  • Ripple is set to launch its own stablecoin, which could be influenced by the outcome of Tether's regulatory challenges.

Ripple CEO Brad Garlinghouse has explicitly stated that the United States government is targeting the stablecoin issuer Tether, which he believes will significantly impact the cryptocurrency market. Speaking on the World Class podcast on May 10, Garlinghouse predicted an inevitable "crypto-related black swan event" and highlighted the potential regulatory actions against Tether as a critical issue to watch.

Garlinghouse remarked, emphasizing Tether's crucial role within the crypto ecosystem:

"The U.S. government is going after Tether, that is clear to me," 

He refrained from speculating on the exact consequences of such regulatory scrutiny but noted it would be "interesting to watch."

Garlinghouse's comments come amidst Ripple's plans to introduce its own stablecoin within the year, potentially heightening the stakes for the company amid the evolving regulatory landscape. Tether, under the umbrella of Tether Holdings Limited, has been a pivotal player in the stablecoin market, maintaining the largest market capitalization among its peers.

Implications for the crypto ecosystem and Ripple's upcoming stablecoin

In 2021, Tether was fined $41 million by the Commodity Futures Trading Commission (CFTC) for misrepresenting its reserve holdings, claiming to have adequate reserves for only about 27.6% of the days between June 2016 and February 2019. Despite controversies, Tether has committed to transparency, issuing quarterly audits to affirm its reserve backing.

Furthermore, the potential regulatory actions against Tether were highlighted by U.S. Senator Cynthia Lummis and Representative French Hill in a letter urging the Department of Justice to examine the extent to which Binance and Tether could be involved in activities supporting terrorism.

As Ripple prepares to launch a stablecoin backed by dollar deposits and short-term government securities, the outcome of Tether's legal challenges could set significant precedents for Ripple and the broader stablecoin market.