Tether expecting a $700 million profit in Q1 amid SEC crackdown

• Tether’s CTO Paolo Ardoino said the company is expected to make $700 million in Q1 profit.
• Tether has been able to turn the woes of its two rivals USDC and BUSD into profitability.

Tether Holdings Ltd, the blockchain fintech firm in charge of the issuance of the world’s largest cryptocurrency USDT is set to rake in a profit of $700 million for the first quarter of this year. According to a report by BNNBloomberg, the bogus earning was confirmed in an interview by Tether’s Chief Technical Officer Paolo Ardoino.

The cumulative profit expected was almost at par with that from the fourth quarter of 2022. For the past quarter, the total number of USDT in circulation topped $78 billion, up 18% in the year-to-date period. In hailing the performance milestones of Tether, Ardoino said the total USDT reserve is now up by an additional $1.6 billion.

Tether’s misfortunes in the first quarter came to be attributed to the seemingly inevitable misfortunes of its closest rivals, USDC and Paxos’s BUSD. In the case of the USDC, the stablecoin lost its peg earlier this month on grounds that its issuing company, Circle has deep exposure to Silicon Valley Bank (SVB) which collapsed recently.

While USDC has been able to regain its peg against the dollar, investors are trading with caution in order not to relive similar experiences that befell Terraform Labs’ own UST stablecoin. Paxos experienced a crackdown from the US SEC as a result of BUSD which it claims was sold as an unregistered security.

The New York Department of Financial Services (NYDFS) has asked Paxos to stop issuing the digital currency, pitching USDT as another major alternative for investors to embrace.

Addressing the issues of its reserve which has always been under contention, Ardoino said the firm now keeps hold of short-dated US Treasury Bills. These T-Bills, a deviation from commercial papers it stopped holding last year, are held in trust by Cantor Fitzgerald. Bahamia lenders Deltec Bank & Trust Ltd. and Capital Union Bank, who assist in looking after its reserves, according to Ardoino.

Tether and the SEC Scare

Despite being a stablecoin Tether can best be described as a very volatile reliable asset owing to the susceptibility of the token to respond to Fear, Uncertainty, and Doubt (FUD) in the industry.

According to caution from one of the industry’s most revered analysts with the username Mr. Whale, there is a likelihood the US SEC will be coming after Tether as there are already indirect mumblings about this move.

Citing some of the warnings from the SEC, Mr. Whale pointed out that the regulator wants users or investors to beware of Proof-of-Reserve (PoR) as this means nothing in the bid to protect investors. 

SEC is warning all investors that “proof of reserves” means nothing, and is hinting at enforcement action.

SEC is hinting at a #Tether crackdown. But doesn’t want to say it outright as they know it would cause the entire industry to collapse.

Tether will 100% go bust. pic.twitter.com/XA9TuZA9td

— Mr. Whale (@WhaleWire) March 23, 2023

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Tether has continued to hit new milestones even though the tendency of a crackdown is imminent. Should the speculations hold true, it will not be the first time the company will combat crackdowns from the US regulator, having settled a fine of over $18.5 million with the New York Attorney General (NYAG) back in 2021.

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