War Between Tether and Ripple CEOs – What Happened?

SEC Accuses Ripple of Selling Unregistered Securities

The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs, the creator of the XRP cryptocurrency token, in the Southern District Court of New York.

The SEC alleged that Ripple raised over $1.3 billion through an unregistered security offering of XRP in 2013. Ripple argued that XRP should not be classified as a security, citing prior comments from an SEC director.

The SEC requested a hefty $2 billion penalty, while Ripple countersued for $10 million and requested further litigation.

Ripple CEO Throws Shade, Predicts Tether in Government's Crosshairs

In the midst of an on-going legal battle with SEC over XRP, Brad Garlinghouse, CEO of Ripple, ignited a firestorm with his recent comments about Tether, the world's largest stablecoin issuer, in his recent podcast with World Class’s Chris Vasquez that was posted on Youtube.

Garlinghouse boldly predicted Tether as the next target of US government regulation, citing a trend of increased scrutiny towards stablecoins.

"The US Government Is Going After Tether. That Is Clear To Me."

This statement carries significant weight coming from Ripple, a company with ongoing legal experience navigating government regulation in the crypto space.

Tether, on the other hand, has faced accusations of involvement in illicit activities and a lack of transparency regarding its reserves.

While Tether denies these claims, Garlinghouse's comments raise concerns about a potential USDT sell-off and value decline if the government does indeed target Tether.

Tether vs. Ripple: A Stablecoin Showdown

Tether CEO Paolo Ardoino fired back at Ripple CEO Brad Garlinghouse's claim that Tether (USDT), the world's leading stablecoin, will be the next target of US regulators.

Ardoino accused Garlinghouse of spreading fear, uncertainty, and doubt (FUD) to undermine Tether's reputation, especially considering Ripple's own upcoming launch of a competing stablecoin.

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

Ardoino defended Tether's record on transparency and compliance, highlighting its work with law enforcement to freeze illicit transactions and its adherence to regulations. He argued that Tether plays a vital role in providing financial services to underserved communities.

While Garlinghouse clarified that he wasn't attacking Tether directly, he maintained that the US government's focus on regulating stablecoins puts Tether in the crosshairs due to its dominant market position.

“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.”

This clash between Tether and Ripple exposes the growing regulatory scrutiny of stablecoins and the fierce competition within the cryptocurrency space.

To mention, back in February, Paxos was ordered by New York’s Department of Financial Services (NYDFS) to stop issuing BUSD due to lack of oversight on Binance.

This came after SEC informed Paxos that BUSD might be an unregistered security. Binance claims it will continue to support BUSD but expects users to move to other stablecoins

As such, both stablecoin companies will need to navigate this complex landscape by balancing innovation with compliance to ensure the future stability of the market.

Ripple Launching Their Own Stablecoin

Despite ongoing legal battle with the SEC, Ripple, the fintech company known for its cross-border payment solutions, is making a bold move into the stablecoin market, currently dominated by Tether and Circle with the launch of its own U.S. dollar-backed stablecoin on XRP Ledger (XRPL).

Tether (USDT) currently dominates the stablecoin market with a staggering $111 billion market capitalisation. Circle's USDC comes in second with $33 billion. These established players have a significant head start in terms of user base and liquidity.

Ripple's stablecoin, XUSD, also known as USDX, will be backed by a combination of cash deposits and U.S. government treasuries, similar to existing market leaders Tether (USDT) and Circle (USDC). This strategy aims to ensure the stablecoin's value remains pegged 1:1 to the U.S. dollar, offering a reliable and transparent payment option. By entering the stablecoin market, Ripple hopes to:

• Increase liquidity and use cases for the XRP Ledger: Their native token, XRP, could benefit from increased activity as users leverage both the stablecoin and XRP for different purposes within the Ripple ecosystem.
• Bridge the gap between traditional finance and crypto: A USD-backed stablecoin could make the Ripple network more attractive to financial institutions seeking a secure and regulated way to interact with the cryptocurrency space.

Ripple plans to launch later in 2024.

Mixed Reactions from Public Regarding Ripple’s New Stablecoin

While the development is exciting, it has elicited a range of reactions from the public. Some eagerly anticipate the launch, while others express confusion about its intended use.

A user on X, Cryptok, also raised concerns about why they are launching the project, citing potential legal issues with the SEC that Ripple may encounter again.

XRP Price Goes Up While USDT Price Goes Down

In the midst of the tension, XRP price sees a 3% significant gain in the past 24 hours while USDT has been dropping, standing at around $0.5065. USDT, on the other hand, is now down by 0.04% in the last 24 hours – $0.9994.

XRP price surged and maintained despite Tether CEO countered back on X. (Source: CoinMarketCap)

USDT price has dropped significantly. (Source: CoinMarketCap)

Comparing both charts, it shows that the impact of Garlinghouse’s comments fell greatly on Tether, even though Ripple is facing a legal battle.

Though USDT price has dropped, it is worth noting that Tether has made $4.52 billion profit in the first quarter this year.

Strategic Moves or PR Stunts?

As Ripple gears up for its stablecoin debut, the clash between Ripple CEO Brad Garlinghouse and Tether CEO Paolo Ardoino sparks intrigue. Is Garlinghouse's prediction a strategic move or an attempt to usurp Tether's dominance?

In the ever-evolving landscape of cryptocurrency, discerning fact from fiction is paramount. Recall how Sam Bankman-Fried faced allegations before FTX's collapse, only to deny them adamantly.

As Ripple and Tether vie for market supremacy, stakeholders must conduct thorough research to navigate this complex terrain.

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Original post by Paolo Ardoino (@paoloardoino) on 13 May 2024:

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

Let me give you an update on Tether USDt ecosystem safety.

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.

At Tether, we believe that our main mission is to ensure that our entire community can benefit from a safe global financial ecosystem. There are, in fact, different crucial requirements that stablecoins need to fulfill in order to become widely adopted. USDt proved overtime to have strong price stability, highly liquid reserves, top tier custodians and profound compliance.

While all above topics have been heavily discussed in the past, today I want to share our updated statistics and key points regarding our global compliance work, the cornerstone of the safety of USDt ecosystem.

While I have revealed in many interviews the following information, most mainstream media newspapers evidently refuse to report such data. Unfortunately the narrative that they are most interested in spreading is sensationalistic against the usage of stablecoins and cryptocurrencies across the world, likely to protect the old guard of the financial establishment.

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.

- Tether stablecoins respect the OFAC / SDN lists.
- Tether has a highly trained internal investigation team that relies on a wide variety of tools, to monitor primary (core platform at http://tether.to) and secondary markets (blockchains and exchanges).
- Tether’s collaboration with Chainalysis helps our teams to have the best in class software and training for a proactive monitoring activity.
- Tether collaborated, since inception, with 124 law enforcement agencies across 40+ different countries.
- 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 blocked more than $639 million working with US law enforcement.
- Tether onboarded the FBI and USSS for reissuances.
- Tether collaborates with Israel’s NBCTF and Ukraine 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.

Brad Garlinghouse (@bgarlinghouse)’s response:

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. 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.