Tether reduces $20 billion funding goals following pushback from investors: FT

Advisers are currently contemplating a reduced fundraising target of approximately $5 billion, as potential investors express doubts regarding both the scale of the offering and Tether’s high valuation.

What to know:

• Tether has reduced its fundraising ambitions from a target of up to $20 billion following investor hesitation regarding a proposed valuation that could have approached $500 billion.
• Advisers are currently exploring a smaller fundraising effort of about $5 billion, as potential investors raise concerns about the deal’s size and Tether’s elevated valuation in comparison to companies like SpaceX and ByteDance.
• Investors remain cautious about regulatory challenges and ongoing issues related to Tether’s reserves and transparency, even as the company reports approximately $10 billion in annual profits and a growing presence in U.S. Treasuries and gold.

Tether has discreetly scaled back its plans to secure as much as $20 billion in new capital after encountering investor pushback against a proposed valuation that would position the stablecoin issuer among the most valuable private enterprises globally, according to a report from FT on Wednesday.

The organization, which issues the USDT stablecoin with more than $185 billion in circulation, considered a funding round last year that could have valued Tether at roughly $500 billion, as per sources familiar with the negotiations.

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Advisers have subsequently proposed raising closer to $5 billion, a significant decrease from previous discussions, as investors questioned both the deal’s scale and valuation.

CEO Paolo Ardoino mentioned that the larger figures had been misinterpreted, clarifying that the $15 billion to $20 billion range was intended as a ceiling rather than a target.

“That number is not our goal,” Ardoino stated in an interview with FT. “If we were selling zero, we would be very happy as well.”

Tether’s fundraising initiative has garnered attention due to the company’s already substantial profitability and limited operational necessity for external funding. Ardoino indicated the firm generated around $10 billion in profit last year, primarily from interest accrued on the assets backing USDT, and noted that insiders were hesitant to liquidate shares.

Nevertheless, prospective investors have expressed concerns about a valuation that would place Tether alongside firms such as SpaceX, ByteDance, and prominent artificial intelligence companies. Some have also highlighted regulatory risks and longstanding questions surrounding reserve transparency as contentious issues.

Tether has been under scrutiny since its inception regarding the quality of its reserves and the utilization of USDT in unlawful activities. Although the company now provides quarterly attestations from BDO Italia, it has not conducted a full audit. The ratings agency S&P Global downgraded Tether’s reserve assessment last year, citing increased exposure to assets like bitcoin and gold.

However, Ardoino has defended the company’s strategy, asserting that Tether’s profitability stands in stark contrast to loss-making AI firms with similar valuations.

“If you believe some AI company is worth $800 billion with a huge minus sign in front, be my guest,” he remarked.

Tether’s expanding involvement in U.S. Treasuries and gold has positioned it as a major link between traditional finance and digital assets — a role that continues to draw interest even as investors deliberate on the company’s valuation.