Tether takes on tech giants with chat app

Stablecoin leader is pouring millions into an ‘unstoppable’ new application

The CEO of Tether, the world’s largest stablecoin, is developing a new peer-to-peer technology that he hopes will further wrest financial control from big institutions, and the cryptocurrency giant he heads is pouring millions into it.

Tether intends to invest tens of millions of dollars into a peer-topeer chat and video conferencing app called Keet to make it “one of three most known communication applications in the world”, Paolo Ardoino, CEO of Tether and co-founder of Keet developer Holepunch, told the Post.

The app was built on a new peer-to-peer protocol called Pear Runtime, which Holepunch launched two months ago, under the absence of any middleman or centralised server, which aligned with the ethos of Tether and Ardoino, who said he sought to offer greater financial freedom.

“We are bitcoiners at heart. We believe in the bitcoin mission that is bringing financial freedom to the world,” Ardoino said in a chat conducted over Keet. “If you have financial freedom but you don’t have freedom of speech … we are not really free, right?”

Tether was started in Hong Kong 10 years ago and has since transformed into a critical component of Web3, often as a main source of liquidity for other cryptocurrencies because of its peg to the US dollar. It still has an active corporate entity in the city, according to government records, but Ardoino said it was “dormant” and the company no longer had personnel here.

With Tether now the world’s default blockchain-based dollar, Ardoino sees his new venture as taking on technology giants such as Meta and Google.

As a peer-to-peer technology, Pear Runtime eliminated the need for expensive server infrastructure, freeing developers to focus on building the apps, he said.

Its ability to do this hinges on the backing of Tether, which Ardoino said made more than US$6 billion in profit last year.

“We don’t care to make more money,” he said. “We are investing in … companies that are aligned with the vision of bringing freedom and creating tools that are ready for the apocalypse.”

Keet is the first flagship tool using Pear Runtime. Like other peer-to-peer apps, users connect directly to other computers so their internet protocol addresses are visible to others in a chat room. However, Ardoino said messages were end-to-end encrypted and traffic could not be publicly monitored.

The company is not able to share developer statistics for the same reason, according to Holepunch CEO Mathias Buus Madsen. But there was “definitely a big percentage” coming from Asia, including India and “the Hong Kong area”, he said.

The app has already built in some cryptocurrency functionality by including a Lightning wallet that allows for fast and cheap transfers of small amounts of bitcoin. The Holepunch team is also working fast to integrate Tether, also known as USDT.

“Bitcoin is the unstoppable money, and Keet is the unstoppable app. That’s why we thought it more appropriate to have bitcoin first,” Ardoino said. “USDT will come probably soon, in the next few months.”

The market value of Tether’s USDT stablecoin passed US$100 billion last month and is now about US$106 billion, according to data on CoinGecko. The total value of stablecoins in circulation stands at US$152 billion, giving Tether nearly a 70 per cent market share, according to DefiLlama.

Its outsize presence in the industry has also invited increasing scrutiny in recent years and criticism of a lack of transparency about the reserves backing USDT.

Tether Holdings, now based in the British Virgin Islands, has traditionally revealed little about itself. It was started by the people behind cryptocurrency exchange Bitfinex, where Ardoino serves as chief technology officer.

Tether publishes quarterly attestations of its reserves, and has told Bloomberg it will start publishing data on its reserves in real time. Ardoino did not offer a timeline for that but said a full audit remained challenging as the 2022 collapse of FTX made big accounting firms hesitant to work with major cryptocurrency firms for fear of reputational risks. “FTX didn’t make our life easier,” he said.

Another source of controversy has been the use of USDT in cybercrime. Ardoino slammed some of the reporting on Tether in recent years, saying the company worked with the US Department of Justice, the Federal Bureau of Investigation and Secret Service to track criminals using USDT.

“You have to be a really, really stupid criminal to use Tether,” he said, pointing to the transparency of its data because it was run on a public blockchain.

Meanwhile, regulators have concerns about the impact of stablecoins on financial stability owing to issues such as capital flight. The Hong Kong Monetary Authority introduced stablecoin regulations for public consultation in December that would require issuers to get licensed.

Tether was also “following the development of regulations” in Hong Kong, Ardoino said, adding it was in discussions with local firms to explore ways to engage the Hong Kong market.

Still, Ardoino made it clear that there was an ideological component underpinning the peer-topeer protocol. He pointed to a quote by the Joker in Batman film

that “reflects well” the mission of Keet: “It’s not about money; it’s about sending a message.”