GuShiio.com Original author: Rukawa Kaede
Compiled by: Lyric, ChainCatcher
Because of his strong interest in cryptocurrencies, author Zeke Faux studied and investigated Tether (USDT) in depth, and finally wrote this book (Number Go Up), which reveals in detail the manipulation behind Tether and its impact on the crypto market. The main points of this article mainly focus on the rise of Giancarlo Devasini in the global crypto market through the operation of the Tether stablecoin USDT. Although Tether initially promised to support it with US$1: 1 reserves, it was frequently questioned by regulators due to its opaque capital flows, frequent additional issuance, and experience hacking incidents and mysterious fund operations. Especially in Southeast Asia, it has become an illegal fund transfer tool. However, he is still promoting projects such as the Bitcoin Bond Program to continuously expand his business landscape.
In January 2021, when COVID-19 swept the world, the encryption market was booming. This article will reveal the complex financial operational and regulatory dilemmas behind the stablecoin Tether (USDT), including Tether’s senior management and capital flow, especially the background and operating methods of Giancarlo Devasini, one of its actual controllers, presenting a little-known financial experiment.
The origin and development of Tether
The project was originally conceived and named “Real Coin” by Brock Pierce. Later, it teamed up with offshore exchange Bitfinex to launch Tether in 2013, focusing on a stablecoin model with 1: 1 US dollar reserves. However, since its inception, Tether has been questioned because of its operating model: while global regulation has not yet been improved, its capital flow and asset reserve issues have always been hidden and complex. Tether not only provides key liquidity support for exchanges, but also serves as the “last resort” when the market is extremely volatile, but the banking relationships and fund management behind it are full of doubts.
Giancarlo Devasini: From plastic surgery to encryption
Giancarlo Devasini was born in Turin, Italy in 1964. He is richer than Piero Ferrari. He even surpasses Piero Ferrari, vice president of the luxury sports car company and son of Enzo Ferrari, with a net worth of approximately US$9.2 billion.
Giancarlo Devasini, the core figure of Tether, has a personal experience of ups and downs. Born in Turin, Italy in 1964, Devasini worked in plastic surgery in his early years, and later moved into the field of electronic product import and software reselling, and even involved in pirated software transactions. It is reported that with his extremely adventurous spirit and non-traditional business methods, he quickly rose in the business world, with net assets of approximately US$9.2 billion, and his wealth once surpassed that of the top management of well-known luxury car companies.
Bitcoin: A Peer-to-Peer Electronic Cash System www.bitcoin.org
After coming into contact with the Bitcoin white paper, Devasini saw the huge potential of the crypto world, then invested in Bitfinex and gradually intervened in the Tether business, and finally controlled approximately 40% of Tether’s equity through acquisitions and strategic layout. His background and operating methods laid the foundation for Tether’s business model and risk control.
Operating in the Storm: Hackers, Banking Crisis and Funding Mysteries
In 2016, Bitfinex suffered the largest hacking attack in history, with approximately 119,800 bitcoins stolen, causing huge losses to assets. In the face of the crisis, Bitfinex adopted a 36% unified account deduction measure and issued a debt token BFX to compensate for user losses. The investigation pointed out that in this incident, the complex flow of funds between Tether and Bitfinex raised greater questions about the true reserve capacity of the USDT.
At the same time, Tether also faces severe challenges in fund management. In 2017, the company deposited funds in a number of banks in Taiwan and other regions. However, due to the concerns of intermediary banks about encryption business, many banks successively interrupted cooperation, resulting in the forced detention of funds. Even when bank accounts were frozen and capital flows were blocked, Tether issued a large number of additional USDTs on Bitcoin Omni Layer, a practice that further led the market to question the authenticity of its 1: 1 reserve.
Court files and regulatory investigations show that Tether itself has admitted that it cannot use the traditional banking system normally. The hidden capital operation model behind it is more like a “wealth game”, using the USDT that is issued at will to carry out large-scale asset dispatch in the market., thus manipulating the price of Bitcoin to a certain extent.
Regulatory investigation and reserve turmoil
In 2019, when the New York State Attorney General investigated the financial exchanges between Bitfinex and Tether, he found a large number of complementary financial operations between the two. Bitfinex once quietly misappropriated Tether’s reserves due to customer withdrawal gaps, and Tether’s official website immediately deleted the promise of “1: 1 US dollar reserve support.”
Changes to Tether’s website at the time raised new concerns about the company’s reserve policy
Since then, Tether has reached settlements and fines with the New York State and the U.S. Commodity Futures Trading Commission, paying US$18.5 million and US$42.5 million respectively, highlighting that its operating model has always been on the verge of regulation.
In addition, reports show that Tether deposits about a quarter of its funds (approximately US$15 billion) at Deltek Trust Bank, while it also allegedly holds up to US$113 billion in U.S. Treasury bonds. This series of operations not only provides Tether with flexibility in fund allocation, but also allows it to play a unique role in the global financial system.
Southeast Asian market and global capital flow
Globally, USDT has become the settlement basis for many trading platforms and DeFi protocols. The investigation revealed that in Southeast Asia, USDT is widely used in illegal activities such as money laundering, fraud, drug trade and even human trafficking. Its convenient cross-border transfer characteristics provide criminals with a low-threshold tool to evade supervision of funds. In the Taiwan market, the trading pair between USDT and the New Taiwan Dollar (TWD) is absolutely dominant, demonstrating the irreplaceable position of stablecoins in global crypto asset transactions.
At the same time, despite multiple bankruptcies in the currency circle, such as FTX, Celsius, BlockFi, etc., USDT has always maintained strong market liquidity and usage demand, consolidating its core position in the entire encryption ecosystem.
Capital operation and future layout
As the crypto market fluctuates violently, Giancarlo Devasini does not seem to be deterred by the storm. In November 2022, he appeared in El Salvador, took a photo with President Naeb Bukler, and it was announced that he was planning a billion-dollar “Volcano Bonds” plan to further leverage Bitcoin assets. Integrate global capital. This move not only demonstrates its confidence in the future of the market, but also exposes Tether’s business ambitions to obtain excess returns through diversification operations.
At the same time, the delicate relationship between Tether’s special position in the global financial system and the U.S. government has gradually surfaced. On the one hand, Tether provides financial support for the U.S. government to maintain the circulation of U.S. dollars in developing countries; on the other hand, its huge U.S. Treasury bond position is also regarded as an important asset supporting the U.S. dollar system. It is this dual identity that makes Tether continue to expand its market share, but also become the focus of controversy and supervision among all parties.
Tether’s global impact and concerns
Tether and its trader Giancarlo Devasini play an important and controversial role in the global crypto market. From the original 1: 1 reserve commitment to today’s complex and ever-changing capital operation model, Tether has not only challenged the boundaries of traditional financial supervision, but has also become an “invisible promoter” of the operation of the global dollar system to some extent. In this market full of high risks and high returns, Devasini’s figure makes people wonder: Is he saving the entire industry, or is he constantly manipulating a huge and dangerous capital game just to satisfy personal greed?
In the future, how the encryption market can find a balance between supervision and innovation, and how Tether and USDT will get out of this gray area are still difficult questions that the industry and regulatory authorities need to answer urgently.
This article is the opinion of author Rukawa Kaede. It does not represent the position of BlockBeats and is not used as investment advice.
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