Ripple CEO Warns: US Action Against Tether Could Affect Crypto Stability

Recently, Brad Garlinghouse, the CEO of Ripple, raised concerns about what he perceives as the US government’s persecution of Tether. In a statement made during a May 10 episode of the podcast, Garlinghouse speculated on the possible implications of such regulatory actions, predicting potential unpredictable events in the cryptocurrency market.

“The US government is going after Tether, that’s clear to me,” said Garlinghouse, highlighting the stablecoin’s importance in the crypto ecosystem. The discussion becomes even more relevant when considering Ripple’s plans to launch its own stablecoin in 2024, which could change the balance of power in the digital financial market.

Tether Holdings, Tether’s parent company, has already faced several accusations and investigations. In October 2023, political figures in the US, such as Senator Cynthia Lummis and Representative French Hill, urged the Department of Justice to evaluate the company’s relationship with suspicious activities, including terrorist financing. Tether’s response was prompt, guaranteeing full cooperation with legal authorities whenever requested.

Furthermore, the company’s transparency regarding the reserves backing USDT has been a point of controversy. In October 2021, Tether was fined $41 million by the Commodity Futures Trading Commission for misleading statements about its reserves, revealing that it held sufficient collateral for USDT only 27.6% of days over a period of more than three years.

These episodes of regulatory tension and investigations intensify the debate about the stability and reliability of stablecoins and their role in the digital financial market. Garlinghouse’s remarks about the possible persecution of Tether by the US government add a layer of uncertainty to the future of crypto operations, especially with Ripple aiming to introduce its own US dollar stablecoin.

Ripple hopes that its stablecoin, backed by dollar deposits, short-term Treasury bonds and other cash equivalents, will offer a robust alternative in the market, as explained by David Schwartz, the company’s chief technology officer.

Comments like Garlinghouse’s reflect a growing concern among cryptocurrency leaders about the impact of government regulation on the sector’s development and stability. As Ripple prepares to launch its stablecoin, the market is closely watching interactions between major cryptocurrencies and global regulators.

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