In July 2014, three aspiring entrepreneurs – Reeve Collins, Craig Sellars and Brock Pierce – launched a startup from a Santa Monica bungalow. Its product, Realcoin, was a dollar-pegged cryptocurrency: a digital token that, unlike volatile Bitcoin, could be used for everyday transactions. When the trio pitched it to Silicon Valley’s big investors, they were laughed out of the room.

This could have made for a classic startup origin story, were it not for the cast behind it. Their résumés betray the whole venture as a pipe dream. Sellars was the only software engineer of the group; Collins was an ad man notorious for the pop-ups that flooded the early internet; Pierce was a former child actor best known for starring in The Mighty Ducks, whose early evangelism for crypto led him to give a speech at a conference organized by Jeffrey Epstein. 

Tether has spent the past five years racing to shore up its reserves

Tether has spent the past five years racing to shore up its reserves

Yet scarcely a decade on, their idea has achieved a phenomenal level of success. Now rebranded Tether, the project is worth $200 billion: a value that is higher than Disney, Boeing or BlackRock. Its token, USDT, is the most traded cryptocurrency in the world. The firm holds more US government debt than Israel or Germany, and this year bought more gold than most central banks, which it stores in a former Cold War bunker in Switzerland.

On Monday, the Senate’s Permanent Subcommittee on Investigations published a report on the firm. Alarmed by its ties to senior figures in the Trump administration, it denounced Tether as an “unprecedented and pervasive” tool for Iranian sanctions evasion and the financing of terrorist proxies.

So how exactly did a questionable Santa Monica startup end up here? The breakthrough came in 2015, when Hong Kong-based exchange Bitfinex became the first company to offer bitcoin-Tether trading. Users could buy USDT from Tether, deposit them on Bitfinex platform and swap it for Bitcoin, sparing exchanges the banking licenses needed to accept dollar deposits.

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