Original Author: Rukawa Kaede

Original Compilation: Lyric, ChainCatcher

Author Zeke Faux, due to his strong interest in cryptocurrency, conducted in-depth research and investigation into Tether (USDT), ultimately writing this book (Number Go Up), which reveals in detail the manipulation behind Tether and its impact on the cryptocurrency market. The main points of this article revolve around Giancarlo Devasini's operation of the Tether stablecoin USDT in the rise of the global cryptocurrency market. Despite Tether's initial promise of being backed by a 1:1 dollar reserve, it has frequently faced regulatory scrutiny due to opaque fund flows, frequent issuance, and experiences with hacking incidents and mysterious fund operations, especially becoming a tool for illegal fund transfers in Southeast Asia. Nevertheless, he continues to promote projects such as Bitcoin bond plans to expand the business landscape.

In January 2021, as COVID-19 swept the globe and the cryptocurrency market surged. This article will unveil the complex financial operations and regulatory dilemmas behind the stablecoin Tether (USDT), including the senior management and fund flows of Tether, particularly the background and operational methods of one of its actual controllers, Giancarlo Devasini, presenting a little-known financial experiment.

The Origin and Development of Tether

Originally conceived by Brock Pierce and named "Real Coin," the project later partnered with the offshore exchange Bitfinex to launch Tether in 2013, focusing on a stablecoin model backed by a 1:1 dollar reserve. However, since its inception, Tether has been questioned for its operational model: in a global regulatory environment that is not yet mature, its fund flows and asset reserve issues have always been secretive and complex. Tether not only provides critical liquidity support to exchanges but also acts as a "last resort" during extreme market volatility, yet the banking relationships and fund management behind it are full of doubts.

Giancarlo Devasini: From Plastic Surgery to Crypto Tycoon

Giancarlo Devasini was born in 1964 in Turin, Italy, and is wealthier than Piero Ferrari, even surpassing the vice president of the luxury sports car company, Enzo Ferrari's son Piero Ferrari, with a net worth of approximately $9.2 billion.

The core figure of Tether, Giancarlo Devasini, has a tumultuous personal history. Born in Turin, Italy, in 1964, Devasini initially worked in plastic surgery before transitioning to the import of electronic products and software resale, even involving himself in the trade of pirated software. It is reported that he quickly rose in the business world due to his adventurous spirit and unconventional business methods, with a net worth of approximately $9.2 billion, at one point surpassing the wealth of senior executives at well-known luxury car companies.

Bitcoin: A Peer-to-Peer Electronic Cash System www.bitcoin.org

After encountering the Bitcoin white paper, Devasini saw the enormous potential of the crypto world, subsequently investing in Bitfinex and gradually getting involved in Tether's business, ultimately acquiring about 40% of Tether's equity through acquisitions and strategic layouts. His background and operational methods laid the groundwork for Tether's business model and risk control.

Operating in the Storm: Hackers, Banking Crises, and Fund Mysteries

In 2016, Bitfinex suffered the largest hacking attack in history, with approximately 119,000 bitcoins stolen, resulting in significant asset losses. In the face of the crisis, Bitfinex implemented a 36% uniform account deduction measure and issued debt tokens BFX to compensate user losses. Investigations indicated that the complex fund flows between Tether and Bitfinex raised further doubts about USDT's actual reserve capacity.

At the same time, Tether also faced severe challenges in fund management. In 2017, the company deposited funds in several banks in regions such as Taiwan, but due to intermediary banks' concerns about crypto businesses, many banks successively terminated cooperation, leading to funds being forced to remain stagnant. Even when bank accounts were frozen and fund flows were obstructed, Tether still issued a large amount of USDT on the Bitcoin Omni Layer, further raising market doubts about the authenticity of its 1:1 reserve.

Court documents and regulatory investigations show that Tether itself has admitted to being unable to use the traditional banking system normally, and its hidden fund operation model resembles a "wealth game," using arbitrarily issued USDT to conduct large-scale asset adjustments in the market, thereby manipulating Bitcoin prices to some extent.

Regulatory Investigations and Reserve Fund Controversies

In 2019, the New York Attorney General discovered a large number of complementary fund operations between Bitfinex and Tether while investigating their financial interactions. Bitfinex had quietly misappropriated Tether's reserves due to a customer withdrawal gap, and Tether's official website subsequently deleted the promise of "1:1 dollar reserve support."

The changes on Tether's website at that time raised new concerns about the company's reserve policy.

Subsequently, Tether reached settlements and fines with New York State and the Commodity Futures Trading Commission, paying $18.5 million and $42.5 million, respectively, highlighting that its operational model has always skirted the edges of regulation.

Additionally, reports indicate that Tether has stored about a quarter of its funds (approximately $15 billion) in Deltec Bank, and it is claimed that it also holds up to $113 billion in U.S. Treasury bonds. This series of operations not only provides Tether with flexibility in fund management but also allows it to play a unique role in the global financial system.

Southeast Asian Market and Global Fund Flows

Globally, USDT has become the settlement basis for many trading platforms and DeFi protocols. Investigations reveal that in Southeast Asia, USDT is widely used for money laundering, fraud, drug trafficking, and even human trafficking, with its convenient cross-border transfer characteristics providing low-threshold tools for criminals to evade regulation. In the Taiwan market, the trading pair of USDT and New Taiwan Dollar (TWD) holds an absolute dominant position, demonstrating the irreplaceable status of stablecoins in global cryptocurrency asset trading.

At the same time, despite multiple bankruptcy incidents in the crypto space, such as FTX, Celsius, and BlockFi, USDT has maintained strong market liquidity and demand, solidifying its core position in the entire cryptocurrency ecosystem.

Capital Operations and Future Layout

Amidst the severe fluctuations in the crypto market, Giancarlo Devasini seems undeterred by the storm. In November 2022, he appeared in El Salvador, posing for a photo with President Nayib Bukele, and news emerged that he was planning a $1 billion "Bitcoin Bond" (Volcano Bonds) project aimed at further integrating global capital through Bitcoin assets. This move not only demonstrates his confidence in the market's future but also exposes Tether's business ambition to obtain excess returns through diversified operations.

At the same time, Tether's unique position in the global financial system and its subtle relationship with the U.S. government are gradually coming to light. On one hand, Tether provides financial support for the U.S. government to maintain the circulation of the dollar in developing countries; on the other hand, its substantial holdings of U.S. Treasury bonds are seen as important assets supporting the dollar system. It is this dual identity that allows Tether to expand its market share while becoming a focal point of controversy and regulation.

Tether's Global Impact and Concerns

Tether and its operator Giancarlo Devasini play an important yet controversial role in the global cryptocurrency market. From the initial promise of a 1:1 reserve to the now complex and variable fund operation model, Tether not only challenges the boundaries of traditional financial regulation but has also, to some extent, become an "invisible driver" of the global dollar system's operation. In this market filled with high risks and high returns, Devasini's presence raises the question: is he saving the entire industry, or is he merely manipulating a vast and dangerous capital game to satisfy personal greed?

In the future, how the cryptocurrency market finds a balance between regulation and innovation, and how Tether and USDT navigate this gray area, remains a pressing question for the industry and regulatory bodies to answer.

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