The world’s leading stablecoin issuer, Tether Holdings, has made a controversial move after investing $420 million in acquiring thousands of GPU chips for Northern Data, a Germany-based mining platform. In addition, this significant transaction was carried out through an Irish shell company.
Tether’s Silent Investment Moves
Tether’s investment in GPU chips for the German crypto mining firm was an exclusive report from Forbes. While Tether has yet to issue an official statement on this move, Northern Data and its key executives provided the basis for the recent revelation.
According to Forbes, Tether’s $420 million acquisition includes the purchase of 100,000 Nvidia H100 GPUs, representing a 2% slice of Nvidia’s anticipated GPU shipments for the entire year.
Moreover, Tether’s role as an intermediary adds intrigue to this transaction. The firm reportedly arranged to purchase these cutting-edge GPUs for Northern Data, a major player in the German Bitcoin mining industry.
Following the move, Tether received a significant 20% ownership stake in Northern Data in exchange for this pivotal role. Surprisingly, the acquisition was not conducted through traditional financial platforms.
Instead, it was facilitated by an Irish shell company called Damoon, which was linked to the parent company, Northern Data. According to insider reports, Northern Data is set to acquire a 70% stake in Damoon, leaving room to finalize the acquisition of the remaining stake at an undisclosed cost.
Meanwhile, the Forbes report added that Northern Data has had encounters with German regulators over its inappropriate financial information and breach of other rules. Similarly, Tether has had its fair share of controversies regarding its transparency report for its asset reserves.
The stablecoin issuer was fined $21 million last year over misleading claims about its financial health.
Resuming Lending Operations
In another development, the Wall Street Journal (WSJ) reported that the stablecoin behemoth has announced the return of its lending service to serve long-term clients. The WSJ report also revealed that Tether’s loan portfolio stood at $5.3 billion in the first quarter of 2023, but it had increased to $5.5 billion by the second quarter.
A company representative confirmed the WSJ report. The report further expressed concerns about Tether’s ability to meet the unexpected influx of USDT redemption requests.
This concern stems from uncertainty about whether borrowers repay their loans on time to avoid liquidity issues. However, Tether maintains that it has enough liquidity to back its loans.
It is worth noting, however, that Tether chooses not to disclose information about the borrowers or the specific assets it accepts as collateral. This development has sparked controversy owing to Tether’s initial pledge to reduce its loans to zero this year.
However, the company’s spokesperson announced that it reversed its decision and planned to eliminate all loans by next year. Meanwhile, Tether and the WSJ have had several run-ins in the past.
Tether released an official statement regarding the media outlet’s questions about its long-term liquidity last December.