From related party transactions to maintaining ambiguity with the White House, interpreting Tether's power play

Author: Chloe, ChainCatcher

Recently, Tether's holding subsidiary Northern Data announced the sale of its Bitcoin mining division, Peak Mining, for $200 million. This transaction not only reflects the complex relationships within Tether's power structure but also raises strong market concerns regarding Tether's related-party transactions.

Tether's Asset Flow is Complex, a Typical "Left Hand Exchanges Right Hand" Trading Strategy

According to corporate registration documents from the British Virgin Islands, the United States, and Canada, the three companies acquiring Peak Mining are Highland Group Mining, Appalachian Energy, and 2750418 Alberta ULC. The actual controllers behind these companies are Tether's co-founder Giancarlo Devasini and CEO Paolo Ardoino. Notably, both names appear on the board of Highland Group, while Devasini serves as the sole director of Alberta, and the identity of the controller of Appalachian Energy remains undisclosed.

Since Tether itself holds approximately 54% of Northern Data's shares and there is a financing relationship of €610 million between the two, the financial ties are exceptionally close. In this context, selling significant assets to a company controlled by Tether's senior management essentially constitutes a related-party transaction.

However, Northern Data is currently listed on a secondary market in Germany with relatively loose regulations, where disclosure requirements are far lower than those of the primary market. Therefore, the company does not need to publicly disclose the identity of the buyer or label the transaction as a related-party transaction. The true identities of these acquiring entities only became clear weeks after the transaction was completed through corporate documents from the British Virgin Islands, the United States, and Canada.

Additionally, the timing of the transaction is also under scrutiny. The sale of Peak Mining occurred just days before the video platform Rumble announced its acquisition of Northern Data for $760 million, while Tether happens to hold nearly 48% of Rumble's shares.

This move is seen as Tether deliberately divesting its highly volatile mining division on the eve of the acquisition, allowing Northern Data to merge into Rumble as a more singular AI cloud computing provider, thereby achieving a higher market valuation and reducing acquisition risks.

In this complex asset flow process, the €610 million loan that Tether previously provided to Northern Data became a core scheduling tool. In the Rumble acquisition case, this loan will be restructured, with half to be repaid to Tether in stock by Rumble, and the other half converted into a new loan to Rumble, secured by Northern Data's assets.

This layered financial design creates an internal ecosystem of self-circulating funds between the holding company, the acquired party, and enterprises managed by senior individuals, further consolidating Tether's control over the overall structure while transferring mining assets to private ownership.

The Subtle Relationship Between Tether, Wall Street, and the U.S. Cabinet

In addition to internal asset scheduling, Tether's relationship with Wall Street investment bank Cantor Fitzgerald is also complex. Especially after Cantor's CEO Howard Lutnick was nominated and confirmed as the U.S. Secretary of Commerce, the market and judicial sectors scrutinized this matter closely. The alliance between Tether and Howard Lutnick dates back to 2021 when Tether, in an effort to quell market concerns about reserve transparency, entrusted hundreds of billions of U.S. Treasury bonds that support USDT to Cantor, with Lutnick acting as Tether's most important credibility endorsing figure in the traditional financial system.

According to a report by The Wall Street Journal last November, Lutnick personally participated in the negotiation of an investment agreement that was originally expected to allow Cantor to acquire about 5% of Tether, valued at up to $600 million. This transaction drew strong criticism from federal senator Elizabeth Warren, who stated that Tether has long been viewed as a tool involved in financial crimes, and the head of its main asset custodian is set to oversee the Department of Commerce, posing a serious conflict of interest risk.

In the face of overwhelming skepticism, Lutnick clarified the details of the collaboration with Tether during a hearing, stating that Cantor's final investment form is "convertible bonds" rather than direct equity, asserting that they do not currently hold equity directly. The financial community generally believes that these convertible bonds grant Cantor the right to convert debt into equity in the future, essentially representing a delayed ownership interest that could even allow holders to exercise substantial control when necessary.

Even though Lutnick stated during the hearing that issuers should not be held responsible for their products being used by criminals, he also promised that after taking office as Secretary of Commerce, he would require stablecoin issuers to undergo more independent audits and be included in U.S. law enforcement monitoring. It can be said that after Lutnick officially took charge of the Department of Commerce, the relationship between Tether, Wall Street, and the U.S. Cabinet has become even more inscrutable.

Tether Achieves $15 Billion Profit This Year, with a Profit Margin of 99%

Moreover, Tether's business landscape has long surpassed the positioning of a stablecoin issuer. From crypto payments, digital asset lending to mining layouts, from AI robots, brain-computer interfaces to media platform investments, and even recently attempting to acquire the Italian football club Juventus.

Nate Geraci, president of The ETF Store, once stated: "While U.S. politicians debate whether stablecoins should be allowed to pay interest, it is worth noting that Tether will achieve a profit of $15 billion this year, with an interest rate as high as 99%."

The capital accumulated from such high profits raises the question of whether it is creating value for the crypto industry or building a closed wealth circulation system for internal executives.

With the asset divestiture of Northern Data, the merger of Rumble, and the relationship with Wall Street, Tether seems to have constructed a closed and powerful business ecosystem, ensuring that its senior executives privatize core assets while pushing its empire toward the core of U.S. power through traditional financial giants and senior officials in the U.S. Cabinet.

Every seemingly independent business decision made by Tether is, in fact, interconnected within the same power structure.