Stablecoin giant Tether is backing an ‘unstoppable’ chat app with crypto to take on Big Tech

“[At Tether] 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 on Wednesday. “If you have financial freedom, but you don’t have freedom of speech … we are not really free, right?”

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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. Tether still has an active corporate entity in Hong Kong, according to government records, but Ardoino said it is “dormant” and the company no longer has personnel in the city.

With Tether now the world’s default blockchain-based dollar, Ardoino sees his new venture as taking on technology giants such as Meta Platforms, which owns Facebook and WhatsApp, and Google. As a peer-to-peer technology, Pear Runtime eliminates the need for expensive server infrastructure, freeing developers to focus on building the apps, Ardoino said.

Its ability to do this hinges on the backing of Tether, which Ardoino noted 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, built in-house by Holepunch, is the first flagship tool using Pear Runtime. Like other peer-to-peer apps, users connect directly to other computers, so their internet protocol (IP) addresses are visible to others in a chat room. However, Ardoino said messages are end-to-end encrypted and traffic cannot be publicly monitored, so only the people a user chats with can see those addresses.

The company is not able to share developer statistics for the same reason, according to Holepunch CEO Mathias Buus Madsen. But there is “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. The Lightning Network is a so-called layer 2 payment protocol on the bitcoin blockchain 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’s more appropriate to have bitcoin first,” Ardoino said. “Nevertheless, USDT will come probably soon, in the next few months.”

As the crypto sector rebounds from the 2022 crash, the total market value of Tether’s USDT stablecoin surpassed US$100 billion last month and now sits at about US$106 billion, according to data on CoinGecko. The total value of stablecoins in circulation stands at US$152 billion, giving Tether a nearly 70 per cent market share, according to market tracker 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 information about itself. It was started by the same people behind the crypto exchange Bitfinex, where Ardoino serves as chief technology officer (CTO). Ardoino joined Bitfinex as a software developer in October 2014 and became CTO of Tether in 2017, according to his LinkedIn profile.

Tether has been publishing quarterly attestations of its reserves, and in October the company told Bloomberg that it would start publishing data on its reserves in real time. Ardoino did not share a timeline for that when asked, but said that a full audit remains challenging because the 2022 collapse of FTX made major accounting firms more hesitant to work with major crypto firms for fear of reputational risks.

“FTX didn’t make our life easier,” he said.

Another source of controversy has been the widespread use of USDT in cybercrime.

Ardoino slammed some of the reporting that has been done on Tether in recent years, saying the company works with the US Department of Justice, Federal Bureau of Investigations and Secret Service to track criminals using USDT.

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

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

Asked if he thinks an app like Keet could accelerate illegal money flows or impact financial stability, Ardoino demurred.

“USDT helps the last mile. Those are the people [whose] entire wealth is US$100 and they don’t have a bank account,” he said. “Bankers don’t care about us.”

Still, Ardoino made it clear that there is an ideological component underpinning the new P2P protocol. He pointed to a quote by the Joker in Christopher Nolan’s second Batman film The Dark Knight that “reflects well” the mission of Keet.

“It’s not about money; it’s about sending a message.”