Compiled by: LenaXin, ChainCatcher
Summary by ChainCatcher Editor
On September 24, 2025, Tether, the world's largest stablecoin issuer, launched a new round of financing, planning to raise $20 billion to achieve a $500 billion valuation, targeting tech giants like OpenAI and SpaceX. Behind this trillion-dollar empire stands a "wolf king" of the crypto world who switched from medicine to business—Giancarlo Devasini.
This Italian, once described by classmates as "extremely ambitious and adventurous," transformed from a cosmetic surgeon to the godfather of cryptocurrency, rewriting the underlying logic of global finance with Tether. Today, USDT, with a market value of $172 billion, crushes its competitors, attracting giants like SoftBank and Ark Invest. However, behind the glamour, controversies such as the Polish money laundering case, reserve fund misappropriation, and regulatory crackdowns have always loomed.
What is the true origin of stablecoins? How do they siphon off bank deposits and weaken the effectiveness of monetary policy? How did Tether grow from a "gambling chip" to a colossal entity shaking the traditional financial system?
ChainCatcher has compiled and edited this information.
TL&DR
The term "stable" means that reserves must be 100% sufficient under any circumstances.
Devasini controls both Tether and Bitfinex, meaning the one running the casino, issuing chips, and sitting at the table is the same person.
Tether uses multi-chain deployment, generally allowing the first trader to be found only through issuance records, making it difficult to trace once in circulation, thus providing strong privacy.
The true origin of stablecoins is not a financial derivative designed by Wall Street elites, but rather a cosmetic surgeon buying an invention from a washed-up actor, launched as a gambling chip in the Bitcoin casino.
Tether provides global users with a payment and storage channel that bypasses the traditional financial system.
A key feature of financial markets is that confidence is often much more important than the truth.
When stablecoins are widely used, they siphon off deposits from the banking system, affecting the money multiplier effect, thereby weakening the central bank's ability to manage the money supply by adjusting reserve ratios.
Commercial banks are supported by central banks, while the entire support for stablecoins comes solely from the reserves held by the stablecoin issuing company.
(1) Exchange on the Brink of Collapse: Who is Misappropriating Huge Sums Behind the Scenes?
In the summer of 2018, Polish police seized the bank accounts of CryptoCapital, the world's largest cryptocurrency payment processing company. For a long time, major global banks have refused to provide services to cryptocurrency exchanges due to regulatory risks.
(Note: CryptoCapital is humorously referred to as the central bank of the cryptocurrency world, primarily handling funds for several well-known cryptocurrency exchanges.)
CryptoCapital found a management loophole in Poland, opening bank accounts under a large number of fictitious company names and depositing huge sums of money. This powerful money laundering capability not only opened doors for cryptocurrency but also caught the attention of drug trafficking groups.
Under threats and inducements, the president of CryptoCapital used cryptocurrency to launder $400 million for drug trafficking groups. After the incident was exposed, CryptoCapital's bank accounts were frozen, affecting cryptocurrency exchanges.
Among the funds fully frozen by Polish authorities, $850 million belonged to Bitfinex, the world's largest cryptocurrency exchange, indicating that Bitfinex was in a state of insolvency. At that time, a large number of customers heard the news and rushed to request withdrawals. Surprisingly, Bitfinex remained rock solid, methodically handling each withdrawal request and quickly calming the crisis.
No one could understand how this was all accomplished.
The answer was revealed in 2019 during the New York Attorney General's investigation into Tether, the issuer of the world's largest stablecoin. When Bitfinex was in dire straits, Tether actually misappropriated $850 million from the reserves of Tether to support Bitfinex.
Tether (USDT) is a stablecoin pegged 1:1 to the US dollar, and the term "stable" means that reserves must be 100% sufficient under any circumstances; otherwise, it cannot be called a stablecoin. The only reason Tether was willing to take such a huge risk to support Bitfinex is that the owners of the two companies are actually the same person—Giancarlo Devasini.
During the Bitfinex crisis, Devasini frantically sent text messages to the head of CryptoCapital demanding deposits, one of which stated that if the money was not returned, the entire cryptocurrency market would fall into crisis, and Bitcoin could crash below $1,000. The materials released by the prosecutor included a large number of detailed records that fully exposed Devasini. As a major trading medium and pricing unit for Bitcoin and many other cryptocurrencies, Tether has a powerful impact on cryptocurrency prices.
Devasini controls both Tether and Bitfinex, meaning the one running the casino, issuing chips, and sitting at the table is the same person. An investor posted online stating that Giancarlo Devasini almost controls all the pump and dump activities in cryptocurrency, and it was from that point that gamblers realized who the dealer was, sitting at the center of power in the crypto world, harvesting them to the point of bankruptcy.
(2) Devasini: From Cosmetic Surgeon to Cryptocurrency Believer
Devasini was initially just a cosmetic surgeon, graduating from the University of Milan's medical program. Classmates described him as extremely ambitious and adventurous, with a remarkable business acumen.
In 1992, Devasini gave up his well-paying job as a cosmetic surgeon to establish a digital products company, specializing in importing computer parts from Asia and then assembling and selling them in Italy. Through assembling computers and selling CDs and DVDs, Devasini began to accumulate wealth. During this process, he was sued by Microsoft for selling counterfeit software, settling the case by paying Microsoft $65,000. This incident became an indelible black mark on Devasini's history, leading many to believe he was a complete fraud.
Like many cliché stories, after achieving some success, Devasini married an architectural designer who was a member of the family behind the globally renowned building materials group Buzzi Unicem. This marriage allowed Devasini to break into the upper class, and his career began to take off. He established or invested in several IT and electronic commerce companies, and by around 2000, his annual income exceeded ten million euros, after which Devasini divorced his wife.
Later, Devasini heard about something called Bitcoin, and he immediately became wildly interested, even posting on Bitcoin forums to sell 20 million unsold CDs and DVDs from his company at a price of 0.01 Bitcoin each. At that time, Bitcoin's price was very low, so Devasini almost sold off all his CD and DVD inventory.
If he still held all the Bitcoin he received back then, it would now be worth tens of billions of dollars. The Bitcoin market gave Devasini an unprecedented sense of pleasure and excitement; cryptocurrency satisfied all his imaginative space, and he firmly believed this was the future of the world. Just as he had previously abandoned his job as a cosmetic surgeon and his wife who helped him enter the upper class, this time Devasini decisively abandoned his decade-long digital product business, investing all his assets into the cryptocurrency field.
(3) The True Origin of Stablecoins
In 2012, Devasini acquired over 50% of the newly established cryptocurrency exchange Bitfinex, taking a low-profile role as CFO. Tether, the company issuing Tether coins, also operated in a gray area. There are three co-founders of Tether, the most famous of whom is American child star Brock Pierce.
(Note: The mysterious company registered in the British Virgin Islands that operates Bitfinex has always functioned in a gray area; in a sense, it is a cryptocurrency casino providing trading and lending services for speculators.)
Around 2000, after stepping away from the chaotic entertainment industry, Pierce found new life in online gaming. He was amazed to discover that loot obtained from defeating monsters in online games could actually be sold on eBay, opening the door to rapid payments.
In 2001, Pierce established a company selling virtual items from games and rented an office in the Jing'an District of Shanghai. At its peak, he employed 400,000 people to farm monsters. Ultimately, Pierce earned millions of dollars through this company. This connection between the virtual and the real fascinated Pierce.
In 2013, Pierce and two partners designed a product that could connect reality even more than game loot—Tether. Tether uses multi-chain deployment, generally allowing the first trader to be found only through issuance records; once in circulation, it becomes difficult to trace, thus providing strong privacy.
At its inception, Tether did not receive much attention, and very few people had a deep understanding of the monetary operating system; the vast majority found it hard to grasp the significance of stablecoins. In fact, most of its initial users were criminals.
Around 2014, U.S. police arrested several cryptocurrency founders on charges of money laundering, which made Pierce very anxious, as he feared he might be the next one arrested. So he decided to sell his shares in Tether.
Strictly speaking, Tether was not a legally operating company, making it difficult to find a buyer, but coincidentally, someone who was not afraid of breaking the law and saw the enormous business opportunity in Tether was Devasini. He acquired the majority of Tether's shares for just $500,000.
In January 2015, Tether officially launched on Bitfinex. Due to its stable price characteristics, Tether became an excellent medium for exchanging fiat currency for cryptocurrency, serving as a key node for trading functions, and its issuance volume immediately showed explosive growth. In simpler terms, all gamblers entering the cryptocurrency casino must first exchange fiat currency for Tether before they can sit at the table.
At this point, we should be able to understand the true origin of stablecoins; it is not a financial derivative designed by Wall Street elites, but rather a cosmetic surgeon buying an invention from a washed-up actor, launched as a gambling chip in the Bitcoin casino. It flowed from the gambling table to the streets, until it shook the global monetary system.
(4) The Formation of the Tether Empire
From 2015 to 2018, under Devasini's operation, Tether's market value ballooned 5,000 times in just three years, far exceeding everyone's expectations. If it were merely serving as a chip for the cryptocurrency casino, Tether's issuance volume could not have achieved such astonishing growth.
As a cryptocurrency stablecoin pegged to the US dollar, Tether provides global users with a payment and storage channel that bypasses traditional financial systems. Whether it’s importers and exporters in South America or ordinary residents in Africa, anyone with a smartphone can complete cross-border fund transfers in minutes, avoiding high fees and complex compliance processes.
This is especially true in countries with severe local currency devaluation, such as Venezuela, which once faced hyperinflation of hundreds of thousands of percent, turning its currency into worthless paper overnight. In such cases, Tether has become the most practical tool for residents to hedge against risks. In many impoverished areas around the world, many people do not have bank accounts, but they know how to operate smartphones.
Tether has achieved financial inclusivity that traditional financial systems cannot provide. During the issuance of Tether, massive amounts of capital flowed into Devasini's hands, and anyone with basic financial knowledge could realize that this powerful financial power could generate astonishing returns with just a little leverage.
In the original utopian design by people like Brock Pierce, Tether's 1:1 reserve model was supposed to be strictly backed by US dollar deposits. However, Devasini thought differently; he believed that reserves should not be rigidly kept in accounts but should be sufficient to meet manageable risks. There is a significant difference between the two.
(5) The Controversy Over Tether's Reserves and Market Impact
Starting in 2016, Devasini gradually shifted the reserve assets from US dollars to various assets such as US Treasury bonds, money market funds, and short-term commercial paper. This change brought Devasini huge interest income. Later, he even invested reserves in Bitcoin, commodity futures, and commercial paper issued by real estate companies, making this stablecoin effectively less stable.
Professor Griffin from the University of Texas believes that various data indicate Tether is likely manipulating Bitcoin prices by issuing more Tether coins. His research essentially accuses Devasini of creating Tether out of thin air, then using Tether to buy Bitcoin, and subsequently depositing the Bitcoin assets into reserves. Devasini would then keep the price difference earned from manipulating Bitcoin prices, issuing coins without backing and then exchanging them for reserves.
This is the most serious accusation against Devasini to date, but no one has been able to confirm it.
In the 2019 investigation by the New York Attorney General, it was revealed that due to Tether's long-standing operation on the edge of legality, for a considerable period, no banks were willing to cooperate with it, and existing bank accounts were frequently restricted, to the point where Devasini even considered withdrawing cash and transporting it back via private jet.
However, during this period, Tether still issued billions of new Tether coins; if there were no banks cooperating with it, how could the 1:1 reserve be realized?
The facts disclosed by the New York Attorney General are astonishing: In fact, the billions of Tether coins issued during this period had no reserves at all. If this were in traditional financial markets, it would be enough to destroy any world-class company. However, Tether holders seemed completely unconcerned; the price of Tether briefly dipped and then quickly returned to normal.
After paying a $18.5 million fine, Devasini's Tether empire remained unshaken. A key feature of financial markets is that confidence is often much more important than the truth. By 2022, Tether's market value had increased 150,000 times compared to 2015.
(6) How Stablecoins Siphon Off Bank Deposits and Weaken Monetary Policy Effectiveness
In the lives of global residents and cross-border transactions, Tether has had a tremendous impact on the traditional financial system, forcing governments to take notice. If a person understands the money multiplier effect, they can grasp the significant impact stablecoins have on the traditional financial system.
(Note: The money multiplier effect is an economic principle that describes how the initial amount of money provided by the central bank leads to multiple expansions or contractions of the total money supply (M0, M1, M2) through repeated deposits, loans, and redeposits in the banking system.)
When stablecoins are widely used, they siphon off deposits from the banking system, affecting the money multiplier effect, thereby weakening the central bank's ability to manage the money supply by adjusting reserve ratios. Traditional bank lending may become more expensive, while stablecoins will form an interest rate pricing mechanism independent of the traditional banking system.
In cryptocurrency exchanges, stablecoins have long established independent lending functions, which are far more convenient than traditional financial systems.
Moreover, the rapid growth of stablecoin reserves also breeds a potential risk. We can assume that if Tether holders collectively issue withdrawal requests under some extreme circumstances, Devasini would have to quickly sell Tether's holdings of Treasury bonds, funds, futures, commercial paper, and other assets into the market. As long as the scale of reserves is large enough, it would inevitably trigger market turmoil.
The biggest difference between stablecoins and commercial banks is that commercial banks are supported by central banks. During the 2008 financial crisis, the Federal Reserve opened discount windows to several commercial banks in the US, fulfilling the role of the central bank as the lender of last resort, providing liquidity support to the traditional financial system in extreme situations and curbing the risk of bank runs.
In contrast, the entire support for stablecoins comes solely from the reserves held by the stablecoin issuing company. If Devasini adopted a dollar deposit model, you could say it was rock solid. If it were Treasury bonds or AAA-rated short-term commercial paper, you could say its risk is comparable to that of a money market fund. If Devasini, driven by greed, makes increasingly high-risk investments, then the reserves could devolve into a hedge fund.
(7) Tether's Defense Against Regulatory and Competitive Pressures
In October 2021, the US Commodity Futures Trading Commission fined Tether $41 million for falsely advertising the reserve status of Tether coins, claiming they were always 100% backed by equivalent US dollars. However, investigations found that only a small portion of Tether coins were backed by US dollars, while the rest were mostly commercial paper and other assets.
Subsequently, Tether was forced to increase transparency and gradually divest risk assets, fully replacing them with US Treasury bonds.
Due to increasing regulatory pressure and challenges from competitors, especially under the siege of USDC issued by Circle, founded by Jeremy Allaire, Tether's market share has declined. However, by May 2025, Tether still had over 350 million users globally, dominating the stablecoin market with a 66.7% market share.
Devasini now resides in a modest three-bedroom apartment in the southern Swiss city of Lugano, but this is by no means a retreat. Under deliberate silence, Devasini remotely controls agents, with signals sent from the Alps to Washington. He is currently engaged in a fierce battle with Allaire, and the ultimate showdown between the rebel and the model student will determine the future direction of the global stablecoin market.
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