Tether has ceased secondary share sales as it pursues a significant funding initiative aiming to secure up to $20 billion in a stock deal associated with a valuation of $500 billion, as reported by Bloomberg. This move intends to prevent existing shareholders from selling their stakes outside the company”s approved processes, which executives consider a potential risk to the fundraising effort.
The company is currently exploring options to manage investor liquidity following the conclusion of this deal. Among the strategies under consideration are share buybacks and the conversion of company stock into tokenized shares that could operate on a blockchain. Sources familiar with the matter indicate that the urgency of these discussions arose after management discovered that at least one shareholder was attempting to exit at a significant discount.
Tether has reportedly communicated that “these efforts will not proceed,” emphasizing the necessity for investors to adhere to the established process led by reputable global investment banks. In a subsequent statement, the firm warned that it would be “imprudent, and indeed reckless,” for any investor to bypass Tether”s management and engage with unauthorized parties.
Bloomberg”s sources suggest that Tether”s management fears that allowing early exits could undermine confidence in the planned $500 billion fundraising. Consequently, executives are not permitting existing shareholders to sell during this primary round. One unidentified shareholder reportedly sought to sell at least $1 billion worth of stock, with some documents reviewed indicating a valuation of $280 billion for Tether. However, it remains unclear whether that figure encompasses any new capital that the company plans to raise.
Another notable investor, Blockchain Capital, considered divesting shares prior to the public announcement of Tether”s funding plans but ultimately decided against it. Notably, Tether”s leadership did not intervene in Blockchain Capital”s decision to abstain from selling.
The company aims to attract strategic investors for this funding round and has engaged in discussions with notable entities such as SoftBank Group Corp. and Ark Investment Management LLC. As of now, no timetable has been established for an initial public offering (IPO), indicating that investors might need to be patient for a public-market exit.
With no immediate IPO timeline in sight, Tether is evaluating alternative methods to provide liquidity to investors after the fundraising. One innovative approach under consideration is tokenization, a concept that has found traction in other firms, including Mike Novogratz”s Galaxy Digital, which recently introduced a tokenized variant of its Nasdaq-listed shares on the Solana blockchain. Similar initiatives have been observed from Kraken and Robinhood Markets Inc..
Tether has already made strides in this area, launching its tokenization business, Hadron, in November 2024. This platform enables users to convert various assets, including stocks, bonds, and commodities, into blockchain-based representations. While the market for tokenized real-world assets has seen substantial growth, having tripled in value this year, it still stands at approximately $18 billion, equivalent to the valuation of the least valuable company in the Nasdaq 100 Index.
Another potential avenue for Tether to explore is share buybacks, a strategy that has been employed across various sectors to allow early investors and employees a way to cash out before an IPO. For instance, Ripple, which raised $500 million in November from investors including Citadel Securities LLC and Fortress Investment Group, revealed it has repurchased over 25% of its outstanding shares in recent years.
