Stablecoin issuer Tether CEO Paolo Ardoino has urged increased investment in decentralized peer-to-peer technologies after a global IT outage today, July 19.

CryptoSlate reported that a significant technical issue with CrowdStrike’s centralized software led to a global outage affecting many sectors. This issue caused Windows computers to display the Blue Screen of Death (BSOD), disrupting services and businesses worldwide.

CrowdStrike’s CEO, George Kurtz, acknowledged the impact of this incident and explained that the problem “has been identified, isolated, and a fix has been deployed.” He added:

“This is not a security incident or cyberattack. The issue has been identified, isolated and a fix has been deployed. We refer customers to the support portal for the latest updates and will continue to provide complete and continuous updates on our website. We further recommend organizations ensure they’re communicating with CrowdStrike representatives through official channels.”

‘Peer-to-peer tech’

However, Ardoino suggested that this incident could have been avoided with more investment in peer-to-peer technologies.

He noted that the internet today is heavily centralized around the services of three companies, and any issues within these companies’ infrastructure can significantly impact entire nations, cities, communities, and businesses.

He stated:

“Concentration and centralization are creating a very fragile world, where almost all the technology we have developed until today, can work only in the best case scenario, and will fail at the first sign of change in the social/environmental ecosystem.”

So, Ardoino highlighted that Tether and Holepunch, a platform designed to create apps without centralized data storage, are building technologies resilient enough to survive an apocalypse. Tether is a major investor in this technology.

Ardoino’s view mirrors the sentiment shared by many crypto stakeholders who pointed out that the global outage showed the importance of decentralization.

Gabor Gurbacs, the founder of PointsVille, said:

“The world’s infrastructure is migrating to robust, decentralized and non-custodial rails. Apocalypse-proofing financial and industrial products and infrastructure is increasingly not a choice, but a necessity.”

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Tether CEO Paolo Ardoino revealed that the company would launch a new class of digital asset products on June 17.

He wrote on social media platform X:

“After a year of hard work, Tether will unveil its new class of digital assets products on Monday 17th June.”

While specific details about these products are still under wraps, the move reflects Tether’s expanding influence and ambitions in the financial sector. In May, Ardoino hinted at the company’s plans to emulate USDT’s success by eliminating monopolistic intermediaries in financial markets.

At the time, he disclosed plans for a peer-to-peer financial markets terminal utilizing Holepunch technology. He said:

“Tether might put significant resources to build a P2P financial markets terminal, based on Holepunch tech. As humanity is enjoying getting rid of monopolistic intermediaries for payments, we could also enjoy the same result in financial markets data infrastructure.”

Tether has yet to respond to CryptoSlate’s request for comment as of press time.

Tether’s diversification

Over the past year, Tether has intensified its diversification efforts beyond its USDT stablecoin product. The company has restructured its operations into four distinct sectors, including finance, data, education, and power.

These restructuring efforts aim to enhance its USDT distribution network and invest in ventures such as AI and Bitcoin mining.

Ardoino emphasized the company’s commitment to this strategy, announcing plans to invest over $1 billion in various deals within the next year. He reportedly said:

“It’s all about investing in technology that helps with disintermediation with traditional finance. Less reliance on the big tech companies like Google, Amazon and Microsoft.”

Meanwhile, these diversification efforts coincide with Tether’s improved finances. In its first-quarter report, the company generated substantial profits of more than $4 billion, with its USDT stablecoin accounting for around 70% of the market.

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Paolo Ardoino, CEO of Tether, has responded to Ripple CEO Brad Garlinghouse‘s claims that the US government was targeting the company, the issuer of the largest stablecoin USDt.

During the weekend, reports emerged that Garlinghouse had suggested that a US government’s scrutiny of Tether could significantly affect the crypto industry. Garlinghouse said:

“The US Government is going after Tether. That is clear to me. I view Tether as a very important part of the ecosystem and I don’t know how to predict the impact it would have on the rest of the ecosystem.”

Tether’s response

In an extensive May 13 social media post, Ardoino dispelled concerns about potential regulatory action against Tether and accused Garlinghouse of sowing “fear about USDT.” He said:

“An uniformed CEO, leading a company being investigated by the SEC, launching a competitive stablecoin (cui prodest), is being reported spreading fear about USDt.”

Ardoino asserted that Tether’s ecosystem remains robust and secure, emphasizing its price stability, ample liquid reserves, top-tier custodianship, and rigorous compliance measures. He added:

“USDt is the most used stablecoin in the world, with hundreds of millions of users across primarily emerging markets and developing countries. Entire communities across these regions are unbanked, left behind by the traditional banking system because they are too poor to be of interest, and are using USDt daily as their checking and saving account.”

Furthermore, the Tether CEO enumerated various factors contributing to USDt’s compliance and adoption worldwide.

Ardoino disclosed that Tether has voluntarily honored 198 requests from law enforcement agencies to freeze wallets in the past year, 90 of which originated from the US. Over the last three years, Tether has complied with 339 such requests, with 158 coming from US law enforcement.

Moreover, he pointed out that the firm has collaborated with 124 law enforcement agencies across more than 40 countries and has frozen over $1.3 billion in assets associated with fraudulent activities, hacks, and money laundering.

Notably, a significant portion—over $639 million—was blocked in collaboration with US law enforcement agencies.

Ardoino concluded his statement by saying:

“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.”

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Bitfinex Chief Technology Officer Paolo Ardoino has debunked rumors that the crypto exchange suffered a database exploit recently.

Over the weekend, several reports suggested a potential database leak comprising 22,500 records of emails and passwords allegedly from Bitfinex users.

However, Ardoino opined that the purported breach was likely fake, stating that only a small percentage of the leaked information matched the exchange users, adding that the firm does not “store plaintext passwords, nor 2FA secrets in clear text.”

Moreover, Ardoino questioned the legitimacy of the hackers’ claims, noting their failure to contact the exchange directly. According to him, the hacker group announced the breach on April 25, but Bitfinex only became aware of the incident a day before the deadline.

Ardoino added:

“Different security researchers rushed to hype the breach. Yet from what we could gather, the hackers collected a database of emails/passwords likely from different crypto breaches. Most of users unfortunately use same email/passwords across multiple sites.”

Nonetheless, the CTO promised to “keep reviewing information to ensure no stone remains unturned.”

Meanwhile, Alice from Shinoji Research, one of the accounts that propagated the Bitfinext database leak claim, has retracted the statement. They wrote:

“Removed the original BFX hack post as I’m not able to edit it. What appears to have happened is this ‘Flocker’ group curated a list of BitFinex logins from other breaches. They then made the site look like a ransom demand for a major breach.”

Alice further noted that the hackers exploited the rumor to generate hype around their activities and attract potential investors for future hacks.

“Instead it seems the plan is to hype up their operation so that people can ‘invest’ in future hacks. They are probably not related to the real FLocker group from a few years ago,” Alice added.

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Stablecoin issuer Tether (USDT) achieved a historic net profit of $4.52 billion in the first quarter despite facing a significant drop in market share.

Record net profit

According to the attestation report shared with CryptoSlate, the firm’s substantial profits chiefly originated from its US Treasury holdings, supplemented by gains from its Bitcoin and gold investments.

Paolo Ardoino, Tether CEO, said:

“Tether has demonstrated its unwavering commitment to transparency, stability, liquidity, and responsible risk management. As shown in this latest report, Tether continues to shatter records with a new profit benchmark of $4.52 billion, reflecting the company’s sheer financial strength and stability.”

As of March 31, 2024, Tether boasted a treasury portfolio exceeding $90 billion in US Treasury bills, encompassing direct and indirect holdings. Consequently, its surplus reserve surged by $1 billion, reaching nearly $6.3 billion.

Simultaneously, Tether Group’s equity surged to $11.37 billion, a notable increase from the $7.01 billion reported on December 31, 2023.

The disclosure also affirmed that Tether-issued stablecoins remain backed by 90%, including assets such as cash and cash equivalents, maintaining the reserve ratio consistent with the fourth quarter of last year.

Specifically, Tether token reserves totaled approximately $110.3 billion, with liabilities amounting to around $104 billion. However, the value of assets in the reserve surpassed liabilities by over $6 billion.

Declining market share

Despite minting $12.5 billion in new USDT tokens during the first quarter, the firm is gradually losing its market share due to the intense competition in the stablecoin market.

According to Kaiko data, the stablecoin’s market share on centralized exchanges (CEXs) has dwindled to 69% year-to-date.

During the first quarter, Tether encountered mounting competition from stablecoins like FDUSD, which capitalized on Binance’s zero-fee promotions. Moreover, USDC, backed by Circle, witnessed a surge in its market share to 11%, suggesting a growing inclination towards regulated alternatives.

Market observers also pointed out the emergence of innovative yield-bearing alternatives like Ethena’s USDe, which are impacting USDT’s dominance. Since its launch in February, USDe’s trading volume has experienced substantial growth, although it receded from April’s peak of over $800 million following Ethena’s ENA airdrop.

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