Ripple’s CEO has forecasted a “Black Swan event” concerning Tether.

The WSJ has reported on Tether scrutiny, raising tensions in the crypto sector.

Tether’s CEO has denied the allegations as “unequivocally false.”

In a recent turn of events, Ripple CEO Brad Garlinghouse has shared a rather foreboding forecast about Tether, warning of a potential “Black Swan event” that could shake the foundation of the stablecoin market. 

Garlinghouse’s comments, made in a May 2024 podcast, have gained renewed interest as Tether now faces a wave of media scrutiny, with a Wall Street Journal report hinting at regulatory pressure on the stablecoin giant.

Ripple Readies RLUSD Amid Tether Concerns

Tether’s CEO Paolo Ardoino quickly dismissed these claims as “unequivocally false.” Yet, Garlinghouse’s speculation reflects growing concerns that the stablecoin market could face disruptive shifts.  Sponsored

Amidst these predictions, Ripple has strategically positioned itself, recently introducing its own stablecoin, the Ripple U.S. Dollar (RLUSD), potentially capitalizing on any instability that may arise in Tether’s wake.

On Chris Vasquez’s “World Class” podcast, Garlinghouse expressed concerns over the potential risks facing Tether’s USDT, specifically suggesting that the U.S. government might increase its scrutiny of the stablecoin. 

Drawing parallels with the FTX and Binance turmoil, he remarked that Tether could be next, adding, “You cannot really predict a Black Swan… but Tether is likely to be targeted.” 

His words suggest a view that regulatory pressure on stablecoins, especially Tether, could manifest in unpredictable and far-reaching consequences for the broader crypto market. Garlinghouse’s warning isn’t just speculative—it’s strategic. 

Shortly after this discussion, Ripple announced its own stablecoin, RLUSD, a direct competitor to Tether’s USDT.  The timing of this release suggests that Ripple is bracing for potential shifts in the stablecoin market, with RLUSD ready to capture attention if Tether faces substantial regulatory scrutiny. 

Ripple’s Wary Stance as Tether CEO Dismisses WSJ’s Claims

The Wall Street Journal recently published a report suggesting that Tether might be under investigation, leading to a brief dip in Bitcoin prices. Ardoino’s response was swift and dismissive. “We would know if we are being investigated,” he stated, underscoring that Tether maintains “regular and direct communication with law enforcement.” 

This denial reflects Tether’s confidence in its operational integrity but hasn’t entirely quelled market concerns. Although Bitcoin quickly rebounded, the initial market reaction to the WSJ report signals a sensitivity to rumors around Tether. 

Ardoino emphasized that Tether actively collaborates with law enforcement to curb misuse. However, the crypto community, including Ripple’s CEO, remains wary, especially given the fallout from FTX and the leadership upheavals at Binance. Tether’s assurance that it is not under investigation will likely be tested as regulatory frameworks continue to evolve.

On the Flipside

Tether’s market position could be threatened if the U.S. intensifies scrutiny on stablecoins.

Garlinghouse’s Black Swan prediction is speculative, though it reflects potential risks.

Ripple’s RLUSD may benefit if Tether faces sustained regulatory pressure.

Why This Matters

Garlinghouse’s “Black Swan” warning about Tether comes as the SEC and other regulators ramp up scrutiny across crypto markets. With Tether’s CEO swiftly dismissing recent accusations, this tension could increase market volatility, putting the spotlight on Ripple’s RLUSD as a potential competitor if regulatory pressure escalates for USDT.

To learn more about Tether’s response to rumors of a federal investigation and IPO, read here:Tether Denies WSJ Rumors: No Fed Probe, No IPO—Only InnovationTo learn more about Ripple CEO’s prediction on crypto regulation after the 2024 U.S. election, read here:Ripple CEO Predicts Crypto Reset, No Matter Who Wins 2024