Tether Bitcoin mining related transactions exposed! 200 million dollars sold to insiders undisclosed.

Stablecoin giant Tether's 54% owned German company Northern Data sold its Bitcoin mining subsidiary Peak Mining for up to $200 million in November. Documents show that the buyer is a company controlled by Tether co-founder Giancarlo Devasini and CEO Paolo Ardoino. However, due to regulations, this related party transaction does not need to be disclosed.

Three mysterious buyers point to Tether executives

Documents reviewed by the Financial Times reveal the true identity of the buyers involved in this Tether Bitcoin mining transaction. The buyers from Peak Mining include Highland Group Mining Inc., Appalachian Energy LLC, and 2750418 Alberta ULC, all of which are directly related to Tether's leadership. Records from the British Virgin Islands show that Highland Group Mining is controlled by Tether's co-founder and chairman Giancarlo Devasini and CEO Paolo Ardoino. Canadian documents indicate that Devasini is the sole director of Alberta ULC. The ownership structure of Appalachian Energy LLC, registered in Delaware, remains opaque, with no publicly listed directors.

Northern Data announced the sale of Peak Mining shares in November, but initially did not disclose the identity of the buyer. The company is listed in a regulated but unofficial market segment in Germany, which requires the disclosure of certain company information but does not mandate the disclosure of related party transactions. This means that even if Tether executives were simultaneously involved with both parties in the transaction, Northern Data has no legal obligation to disclose this critical information. This regulatory loophole provides space for Tether's Bitcoin mining operations to operate opaquely.

This is the second attempt to sell Peak Mining to an entity associated with Devasini. In August of this year, Northern Data announced a non-binding agreement with Elektron Energy to sell the mining division for $235 million. According to documents from the British Virgin Islands, Elektron is also controlled by Devasini. This transaction ultimately did not go through, and Peak Mining was instead sold to three companies mentioned in recent documents for a lower price of $200 million, indicating that Devasini saved $35 million through renegotiation.

The complex financial structure behind the acquisition of 767 million USD

The timing selection further adds complexity to this Tether Bitcoin Mining transaction. Just a few days after the news of Peak Mining's sale was announced, Rumble, a conservative video platform in which Tether holds a 48% stake, signed a business merger agreement to acquire Northern Data for approximately $767 million. This means that Tether's executives first purchased Bitcoin mining assets for $200 million, and a few days later, Tether's affiliated company acquired the entire Northern Data (excluding the Bitcoin mining business) for $767 million.

According to the agreement, Tether committed to purchasing $150 million worth of GPU services from Rumble and signed an exclusive advertising agreement worth $100 million. Tether also provided a €610 million loan to Northern Data. According to the terms of the acquisition by Rumble, half of the loan will be converted into shares of Rumble after the transaction is completed, while the remaining portion will become a new loan that Tether provides to Rumble, secured by Northern Data's assets.

Tether's Triple Role in This Transaction

Northern Data Major Shareholder: Holds approximately 54% of the shares, has absolute control over company decisions, and can lead the decision to sell Peak Mining.

Peak Mining Buyer: Acquired the Bitcoin Mining business for $200 million through three companies controlled by Devasini and Ardoino.

Rumble Major Shareholder and Creditor: Holds 48% of Rumble's shares and through Rumble, is reacquiring Northern Data for $767 million, while also providing a €610 million loan.

This complex trading structure allows Tether to complete an asset restructuring in form, but in substance, all assets continue to circulate within the Tether ecosystem. More importantly, through this operation, Tether has divested its Bitcoin mining business from the publicly listed company Northern Data and transferred it to a private entity that does not require public disclosure, significantly reducing transparency requirements.

Northern Data's regulatory crisis and Tether's risk exposure

The Tether Bitcoin mining transaction comes at a time when regulators are conducting a broader review of Northern Data. In September of this year, European authorities raided the company's offices in Germany and Sweden as part of an investigation into its alleged massive VAT fraud (with amounts possibly exceeding 100 million euros). Northern Data denies any wrongdoing and attributes the investigation to “misunderstandings regarding the tax treatment” related to its GPU cloud services and traditional cryptocurrency mining business.

Earlier, former senior executives of Northern Data, Joshua Porter and Gulsen Kama, filed a lawsuit against the company, accusing it of being “on the brink of bankruptcy” and “willfully evading taxes, with amounts involved potentially reaching tens of millions of dollars.” Porter, the former CEO of North America for the company, claimed in the lawsuit that he discovered the company owed $30 million in taxes to Germany, with only $17 million in cash available and a monthly cash burn rate of $3 million to $4 million. Although the two plaintiffs later withdrew all claims, these allegations cast a shadow over Northern Data's financial health.

Tether CEO Ardoino announced earlier this year that Tether's goal is to become the world's largest Bitcoin miner by the end of 2025, stating that this move is to safeguard its over $10 billion Bitcoin assets. According to previous statements, the company has invested over $2 billion in Bitcoin mining and energy infrastructure across 15 mining sites in Uruguay, Paraguay, and El Salvador.

However, S&P Global Ratings recently downgraded the stability rating of Tether's stablecoin USDT to level 5, the lowest level in its rating system. S&P warned that USDT's risk exposure to Bitcoin currently exceeds its reserve buffer, which could lead to under-collateralization of USDT during market downturns. This means that as Tether expands its Bitcoin mining business, it is also increasing the systemic risk of its stablecoin.