Paolo Ardoino: The Hardest Working Man in Crypto

The “smart take” among the cryptocurrency industry’s educated or otherwise influential elite is that Tether, the maker behind the world’s largest stablecoin, tether, is “unfairly maligned,” but may eventually fail. Not only is USDT the most successful stablecoin, a type of blockchain-based asset designed to hold a stable value, but it could be said to be the most successful crypto product to date. USDT may not have the market cap of bitcoin (BTC) or ether (ETH), the two largest free-floating cryptos, but it crushes them in terms of volumes. And so, if it crashed, as some expect, it would fall hard.

This profile is part of CoinDesk's Most Influential 2023. For the full list, click here.

People use tether. It is used to trade, to hedge, to transfer, to pay, to bridge, to exchange, to value and to take account. In other words, tether is used like money. It is used the same way a U.S. dollar is used. In fact, that is the point — Tether creates tethers to bring dollars on-chain, and now, because dollars are on always-running and globally-accessible blockchains, dollars are available around the world, anytime and anywhere.

So what is the fuss? Ask a so-called Tether Truther, those who would say the company is fairly maligned (and destined to fail), and they might point out the other ways tether is or alleged to be used. Tethers are sometimes used to bribe, to violate sanctions and to launder money. Some say tethers are also used to prop up inflated valuations across the crypto markets. Often, Tether’s skeptics simply repeat the various things Tether itself has said over the years, since the company was founded in 2014, to show inconsistencies.

The claims Tether has made about how tethers will be backed have changed overtime — first by dollars and now by dollar equivalents — raising questions about why and how and what it means. Tether is, in many ways, a simple business to understand: It takes in money and hands out tokens. It operates not unlike a bank or money-market fund in traditional finance. And the biggest worry about the biggest stablecoin is equally simple: if it is really holding the money it is meant to be holding?

See also: Reviewing the Tether Documents

All of these concerns and all of tethers’ vast influence is now the responsibility, primarily, of Paolo Ardoino, who was promoted this year to chief executive officer of Tether. Ardoino is a company man. He has been a public face of the firm for years, which is sometimes criticized for a lack of communication and clear stewardship. Ardoino was chief technology officer of Tether and its sister company, crypto exchange Bitfinex, before rising in rank (he remains CTO of Bitfinex). He’s been at both essentially since inception, starting out as a senior software developer.

There is a convincing argument to make that Ardoino is the hardest working man in crypto. Look at his GitHub; he has 3,275 code contributions this year (2-3 per day is considered average for a full-time engineer), and in 2017 he notched 37,720 commits. In addition to running Tether and coding Bitfinex, which for a time was the largest exchange, Ardoino also founded and serves as chief strategy officer of Holepunch, a peer-to-peer communications platform that he conceived with a friend five years ago.

“I don't have other passions apart from what I am doing,” he said in an interview. He mentioned the martial arts training that keeps him from being logged on all day. “I really don't have other hobbies.”

Some men work to live, and others live to work. Ardoino is deep in the latter camp. Since transitioning to CEO this year, he said he’s been trying to keep his hands and mind active by keeping up with the code. Ardoino leads something of a moonshot division inside Tether, which has about 25-30 engineers building and researching tools he thinks will one day make bank and better the world. The team already has work to show for it, a decentralized video calling application called Keet, which runs on Holepunch.

“Becoming the CEO of Tether has been a process. The transition has been discussed openly with the board and rest of management for several months. I've been considering myself more than a developer for quite some time,” Ardoino said in an emailed statement. “I love managing teams, planning the strategy for the company and products and executing granularly.”

The division does not have a formal name, but could be compared to the company research parks of yesterday, like the telecommunications subsidiary formerly known as Bell Labs (which has housed a number of notable engineers and helped build the modern internet) or Google’s X innovation unit. Only Ardoino envisions his unit not only as a for-profit, but as being profitable. The team has its eyes on Bitcoin node infrastructure and artificial intelligence, among other technologies with potential to commercialize.

"It's a well-calculated approach that we have," he said, mentioning the firm is investing about 10% of its cash in R&D. The projected revenues on Tether's bitcoin mining "will make money," though there is an almost "philanthropic" approach to some of Ardoino's other initiatives. "We are trying to put ourselves in a position where, in the future, we won't be able to be evil because we are building technology that everyone can use," he said, referencing Google's now-infamous slogan, "Don't Be Evil."

Ardoino, who has piercing blue eyes reminiscent of Frank Sinatra, hails from a small rural town in northern Italy. Genoa, specifically, the land of “pesto and focaccia,” he said. He had an early affinity for computers. He remembers his first: an Olivetti 386, circa 1991, which had 4MB of RAM and a 3.5-inch floppy disk port. It ran MS-DOS. “I remember my father telling me the computer cost a couple of months’ salary,” he said. He was told to play with it carefully.

“I was so excited that I told all my friends at school. I remember my math teacher heard me and replied that computers were just a waste of money, time and would never be useful to people,” Ardoino said. He lived far away from his friends and preferred to spend his afternoons on the computer. He got bored of the available applications like Microsoft Word and Paint. He taught himself to code, so he could make his own games.

He was an early Linux user. He imbibed writings from Linus Torvalds, the founder of that open-source operating system, who posted the software free online and invited people to try to improve it. This was an idea that resonated with Ardoino, it was a game where everyone won. He also read Richard Stallman’s "GNU Manifesto," which remains a foundational document for the free software movement, and Eric Raymond's "The Cathedral and the Bazaar," which makes the case that code should be built bottom-up, in public and be free to enter (like a bazaar) rather than top-down and closed off (like a cathedral). Asimov is his favorite writer.

"From the outside it can look messy and noisy — it's not poetic at all, but if you are inside, if you look, the bazaar is extremely efficient," he said. You can take away parts from a bazaar and it remains what it is, it is flexible and resilient, whereas a cathedral is a "monolith." Bitcoin, which came out a decade after Raymond's writing, is bazaar software.

Ardoino stayed close to home when going to college, the University of Genoa. He studied computer science and math as it applied to computer science. He was part of groups for students who wanted to work on Linux, and got more interested in distributed computing, parallel computing and peer-to-peer systems.

“BitTorrent is really dear to me,” he said. He remembers when the software came out, as he remembers the launch of many peer-to-peer applications. He can recall the specs of filing-sharing software from Gnutella to Napster, to BitTorrent, to Kazaa, to Limewire, the way some people recall the kings and queens of England.

Towards the end of his college career, he worked on a three-person research project about “resilient networking” that would allow “people to communicate even in the worst case scenarios.” He loved the work, hated the money. “Being Italian, you weren’t paid much,” he said, saying each researcher earned $800 per month. “So I started looking for other opportunities.”

He taught himself finance and economics, he said. In 2011, he took his first job with a hedge fund, designing and calibrating its trading systems. By 2013, he was in London, the regional finance hub, running his own startup that created trading software products for hedge funds. The company was called Fincluster, according to LinkedIn. “It was a small startup, yet we were doing really well,” he said.

Tether’s leadership is a close-knit bunch. Ardoino met Giancarlo Devasini, a former plastic surgeon, in London in 2014. Devasini, now chief financial officer of Tether, had been running Bitfinex at the time and offered Ardoino a job. Stuart Hoegner, a Canadian who goes by @bitcoinlawyer on Twitter, has been general counsel at Bitfinex since 2014. Former CEO Jean-Louis van der Velde was also there from the start, and remains an advisor as well as CEO of Bitfinex.

This is the team that brought Tether to market, though the idea for the project was initially incubated by the Mastercoin team, led by entrepreneur, aspiring politician and former child actor Brock Pierce, under the name Realcoin. Pierce’s founding team, which included William Quigley, Reeve Collins and Craig Sellars, stepped away from the project early on. In some sense, the original idea for Tether was to be a stopgap solution for many companies in "Bitcoin 2.0," as the crypto industry was known as at the time, that struggled to get access to banking services.

Tether would get banked, and supply private dollar equivalents to users. It initially promised to keep a corresponding amount of fiat in reserves to match the number of tokens in circulation. It is thought many of its early banking relationships were with regional banks in Taiwan, which used correspondent services from Wells Fargo (which Tether entered into litigation with in 2017 after the bank cut off its access). Tether has been accused of falsifying invoices and contracts in order to get and maintain banking relationships, and regulators in New York found the company would use accounts linked to its executives and "friends of Bitfinex."

Bitfinex is owned by Ifinex, which is headquartered in Hong Kong, and Tether is owned by DigiFinex, which is domiciled in Singapore. A Tether spokesperson clarified that these are distinct entities that share some mutual shareholders, but operate independently. "This distinction is essential to provide a transparent and accurate representation of our corporate structure," the representative said in an email.

“For us, it was true, we got lucky, we know,” Ardoino said in an interview. “We are simple people and we are making good money with the company.” Though it hasn't always been easy.

Essentially, since the project was founded, Tether has been plagued by concerns about redemptions. In a 2021 episode of “Odd Lots,” convicted fraudster Sam Bankman-Fried, who owned the Alameda Research, a hedge fund known to be a major tether user at the time, described the redemption process as straight-forward though with the occasional hiccough.

The company has historically struggled to maintain banking access — at times using Noble Bank, which has connections to Pierce; the Bank of Montreal, where reportedly Hoegner banked; and a "shadow bank" known as Crypto Capital Corp. — though its current relationship with Deltec, in the Bahamas, has lasted for several years.

Ardoino said one of the most intense moments of his career was shortly after the collapse of the Terra/LUNA algorithmic stablecoin project founded by Do Kwon. Fir Tree Capital Management, a hedge fund had taken out a massive short against tether, a public bet the company would fail, at the time. The collapse of tether’s decentralized rival, UST, caused contagion elsewhere, and a massive uptick in withdrawals.

“We came out, I think, in great shape,” Ardoino said. The company processed around $7 billion worth withdrawals within 48 hours and over $20 billion over the next 20 days, or about 25% of the firm’s total holdings at the time. “It was quite an interesting moment. I'm quite fond of that moment, actually,” he said, reflectively. “It forced us to prove to the world that we actually were solid.”

Tether, at least this year, has money to spend. With a market cap just under $90 billion, an all-time high, it presumably has nearly $90 billion to hold in yield-earning banks accounts and invest prudently. Today, that means primarily in U.S. Treasuries, which are considered essentially risk-less. But it also invests in slightly riskier asset classes like repo agreements, money market funds and corporate bonds with a greater expected return. This year, it put over 1% of its holdings directly into bitcoin, which is new for the company.

Tether used to invest in commercial paper from companies in China, but stopped.

See also: Tether's Banking Relationships Detailed in Newly Released Docs

“We have a little bit of money to invest,” Ardoino said. In the first quarter of the year, Tether reported $700 million net profit in a voluntary attestation. In Q2: $850 million. In Q3: over $1 billion. With rising interest rates, it has never been more profitable to be in the stablecoin business, Ardoino said.

Tether has never been unseated as the largest stablecoin. However, this time last year, tether was losing market dominance compared to rivals including Circle’s USDC, Binance’s BUSD and, to a lesser extent, MakerDAO’s DAI (though tether was never dominant in DeFi, where dai reigns). This was in part due to regulatory headwinds and a controversial reputation.

In 2021, the New York Attorney General found that Tether was not always consistently “honest” about its reserve assets. Tether paid a $18.5 million fine to settle the charges. That same year, the U.S. Commodity Futures Trading Commission said much the same, and fined the firm $41 million for making misrepresentations about its backing and bank accounts.

In October, Tether said it had $3.2 billion of excess reserves — that is money in abundance to the amount Tether would have to pay out if every single customer withdrew every single dollar from the platform. Tether also charges fees, $1,000 per withdrawal (with a $100,000 minimum). Ardoino said he takes an active role in deciding how the firm allocates its reserves, and what it invests in.

Under Ardoino’s leadership, Tether is positioning itself as an infrastructure provider. The company has made notable investments in bitcoin mining, as well as to construct hydropower facilities in Uruguay and geothermal facilities in El Salvador, which are intended to power bitcoin mining operations.

His skunkworks team is developing a Bitcoin node communications channel using the P2P protocol Keet, which will help “coordinate and manage miners and containers and energy production,” he said. The system is called Moria (yes, it is a “Lord of the Rings” reference, and, yes, Ardoino is a fan), and is pitched as bitcoin mining meets the “Internet of Things.”

“If you think about the mining side, that is an interesting side, because you have tens of thousands of miners and hundreds of thousands of sensors — temperature sensors, oil temperature sensors, wind sensors, light sensors. Everything is a sensor. Then you have the containers. They all produce data and they contribute to the stability of the system,” he said.

Although Ardoino doesn’t exactly have the time to micromanage the team, he is hands-on when it comes to R&D. He said he coded the first version of Moria himself. “I believe that it is important to showcase to others how you want things, rather than telling them. I like to be first-line, you know. I like to bootstrap and show my experience,” he said.

It’s clear, too, he had many ideas for how this general purpose technology could be applied. Ardoino discussed hypothetically building an alternative to chat apps like Telegram and WhatsApp. Keet, he said, could be a cost-effective way around those companies’ infrastructure and scalability needs. “Every Telegram user costs around 90 cents per year,” he said, doing back-of-the-napkin math of the server costs.

“Even if Keet had 1 billion users … BitTorrent proved that, with the hundreds of millions of users, it will not have any costs,” he said. “It’s peer-to-peer.” Keet does not bring in revenue, yet. But Ardoino seems willing to eat that cost, for now, saying there are only 20 people working on the software, meaning it costs somewhere in the ballpark of $4 million per year, at least for Tether.

Indeed, servers are likely on Ardoino’s mind because Tether recently invested in the E.U. data company Northern Data. Northern Data is a company with a somewhat mixed reputation in the bitcoin mining space. We asked about that, and Ardoino, laughing, said: “We have been the most criticized company in the world, so who am I to judge?”

There were also genuine business concerns driving the decision, including Northern’s deal with Nvidia that makes it poised to “become the biggest AI infrastructure provider in Europe if you remove Google, Amazon and Microsoft,” Ardoino said.

“Northern data will provide services to every single European company,” he said. “Every car manufacturer in Europe is trying to compete with Tesla, every shipping company in Europe is trying to optimize their routes and so on. Everyone is begging for AI infrastructure.”

Tether also has a small unit of less than five employees total doing research into AI, looking to see if there are applications that are useful for the company and whether it could construct its own cost-effective large language model, or LLM (the technology behind the contemporary generation of AI). Bitfinex and Tether together have employees in 60 different countries, Ardoino said, and he’s particularly interested in whether AI can help with the firms’ translation needs.

“We just started this process … We want to understand it really well before we scale up,” Ardoino said. AI infrastructure, of course, is tremendously expensive to operate — and even a company like Tether, which is on track to make over $4 billion this year, could soon find themselves scrounging for pennies (or raising capital from Microsoft).

See also: Tether Aims to Publish Reserve Data in Real-Time Reports

A fan of Azimov, known for his dystopian visions of artificial intelligence, Ardoino said that AI has the potential to create the biggest social unrest that “humanity has faced since the Industrial Revolution,” he said. It can enrich a few corporates at the expense of the many, destroy privacy as a human right and lead to mass layoffs.

Though he has criticisms of the Italian Way-of-Life, Ardoino keeps something of the European humanist mentality close. He said that Tether would resist firing employees just “because AI has made the job more efficient.” People have families, he said, adding “finance is not the only thing that matters.”

Ardoino has been at the helm for just a few months, and it doesn’t seem like he has plans to stop anytime soon. However, Tether, more than most companies in crypto, has regulatory headwinds, and it may not be his choice. Several sitting U.S. Senators have singled the company out, calling it a potential threat to national security. The U.S. Treasury hinted it is also eyeing the operation.

Of course, this is not new. Tether has gone through the regulatory wringer before and walked away with two slaps on the wrists. The firm was smaller then, of course, but it also had much more baggage to deal with. It’s true Tether lied to the public when it promised to hold all its reserves in dollars, but now it does not promise that. And, if it ever operated on fractional reserves (i.e. with fewer reserves than its deposits), it likely isn’t anymore.

Ardoino did not answer questions regarding potential regulatory action, or about whether the firm still intended to complete an audit.

“I don't plan to ever stop doing what I do today. Throughout my life, I have been in love with technology and science. I have seen what I can build alone and what wonderful projects I can deliver with a team. I wake up happy, even through challenging times. I feel blessed for the opportunity that I have. It allows me to plan and build so many of the ideas that I keep dreaming about. There is still so much to do,” Ardoino wrote in an email.

Whether or not Tether is stopped, either by market risks or by global regulators, one thing is clear. Ardoino, after nearly a decade without a proper vacation, could likely use a break.

“I never been to Japan. Japan is the country that created the first gaming consoles and videogames. They have an amazing culture. I find exploring and experiencing other cultures one of the most enriching opportunities in life,” he said.

CORRECTION (DEC. 4, 2023): Ifinex is only the parent of exchange Bitfinex while DigiFinex owns Tether. They are distinct entities that share common shareholders. Fixes a transcription error.

UPDATE (DEC. 4, 2023): Adds details about banking relationships.

UPDATE (DEC. 6): Adds quotes about software development in second and third sections.