Investors think the valuation is too high! Tether cuts its fundraising target from $20 billion to $5 billion—has the stablecoin leader also "admitted defeat"?

Investors think the valuation is too high! Tether cuts its fundraising target from $20 billion to $5 billion—has the stablecoin leader also "admitted defeat"?

Tether, the world's largest stablecoin issuer, has faced investor pushback on its $500 billion valuation target and has since significantly lowered its anticipated funding size. Tether originally planned to raise $15 to $20 billion, but its advisers are now considering dropping the amount to as low as $5 billion, highlighting market skepticism over its lofty valuation.

According to the Financial Times on Wednesday, Tether CEO Paolo Ardoino played down the fundraising size in an interview, stating that the initial $15 to $20 billion figure was a "misunderstanding." He said, "That figure is not our target—it's the maximum we are prepared to sell. If we sell no shares at all, we’ll be very happy." This comment contrasts with the company’s ambitious fundraising plan launched last year.

Investors are concerned about the $500 billion valuation, which would place Tether among top private companies like OpenAI, Anthropic, SpaceX, and ByteDance. Although Tether made about $10 billion in profit last year, its profits are projected to fall 23% in 2025, putting its profitability to the test.

The crypto market has plummeted over the past six months, with traders rushing out of speculative assets, further weakening investor interest in highly valued crypto projects.

Valuation Disputes Become Biggest Financing Obstacle

Sources say Tether’s advisers faced clear resistance after engaging potential investors. The $500 billion valuation has sparked widespread skepticism, with investors privately voicing concerns about the pricing.

Paolo Ardoino defended the high valuation by comparing Tether to loss-making artificial intelligence companies. "AI companies make as much profit as we do, just with a minus sign in front," he said. "If you believe an AI company is worth $800 billion and it has a huge negative in front, that's up to you."

Tether claims last year’s profit was about $10 billion, mainly from investment returns on assets backing USDT. The company issues USDT, a dollar-pegged stablecoin with a $185 billion market, serving as the reserve currency for the digital asset market. However, profits in 2025 are expected to drop by about a quarter, which Ardoino attributed to falling Bitcoin prices.

Sources warn talks are ongoing and financing terms could change. If the broader crypto market rebounds, investor sentiment may shift.

Regulatory Risks Make Investors Hesitant

Sources say some potential investors are worried about regulatory risks faced by Tether. Since its founding in 2014, the crypto group has been under scrutiny for concerns about illegal use of its token as well as the transparency and quality of its asset reserves.

In recent years, Tether has published quarterly attestations of its reserves from accounting firm BDO Italia, but has not had a full audit. Ardoino said the company has shown investors "in-depth" tools to cooperate with law enforcement agencies.

Late last year, S&P Global Ratings downgraded Tether’s reserve rating to the weakest level due to increasing exposure to high-risk assets like Bitcoin and gold. Ardoino replied at the time, "We proudly accept your dislike."

New U.S. stablecoin legislation signed by Trump, together with competitor Circle’s public offering last year, has given Tether new momentum. Tether recently issued new tokens in the U.S. that comply with regulations. Yet regulatory uncertainty remains a top concern for investors.

Profitability Faces Test

Tether’s profit structure relies heavily on crypto market performance and asset reserve investments. In 2025, profits are projected to fall 23% to $10 billion, reflecting the direct impact of the crypto market downturn.

Ardoino revealed the company earned about $8 to $10 billion from its gold holdings, thanks to rising precious metals prices. Since 2020, USDT’s growth accelerated, making Tether one of the world’s biggest buyers of U.S. Treasuries and, in recent months, a major player in the gold market.

These large-scale purchases make Tether one of the most important links between the global financial system and the volatile crypto world. The company is tightly controlled by a small circle of long-serving executives, and insiders are unwilling to sell shares, contributing to the uncertainty over how much equity will be sold.

Tether’s effort to attract high-profile investors is seen as a barometer of crypto industry interest. The move is seen as an attempt to bolster Tether’s credibility and network, even though the company is highly profitable and barely needs additional capital. Digital assets got a boost after Trump’s election on promises of friendlier U.S. regulation, but the market has sharply declined over the past six months.

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