WSJ: Tether Plunges $1.5 Billion Into Investments, Enriching 'Middlemen'

Original Title: How a Colorful Investor Profited From a Crypto Giant's Dealmaking

Original Authors: Ben Foldy, Caitlin Ostroff, THE WALL STREET JOURNAL

Original Translation: Luffy, Foresighht News

The issuer of the world's most popular stablecoin USDT, Tether, is aggressively acquiring companies. It has acquired a majority stake in the artificial intelligence field company Northern Data and the brain-machine chip company Blackrock Neurotech. Notably, the deals between Tether and these two companies were both facilitated by the same German investor, whose introduced deals yielded mixed results.

The circulating market capitalization of the stablecoin USDT currently exceeds $115 billion. Thanks to significant interest rates, Tether is able to earn roughly $4 billion in annual income from the U.S. Treasury bonds supporting USDT.

Tether has enlisted the help of tech investor and entrepreneur Christian Angermayer to invest this substantial funding. This versatile financier has also amassed wealth through some unconventional investments, including psychedelic drugs, dinosaur fossils, and alternative substances to stimulants used by athletes during the Olympics.

So far, Angermayer has helped Tether invest approximately $1.5 billion in two companies in which he holds stakes, earning handsome commissions from the deals. The companies they invested in are facing perennial losses.

Over the past year, Tether has acquired a majority stake in Northern Data. Northern Data, a German data center operator running at a loss, aims to become an artificial intelligence company. Another company acquired by Tether, Blackrock Neurotech, is a struggling brain-machine implant company based in Utah, competing with Elon Musk's Neuralink.

Tether did not respond to our request for comments. A spokesperson for Northern Data stated that the company's revenue growth demonstrates the success of its strategic investments in the field of artificial intelligence.

Tether is not the first cryptocurrency company to make a big investment. Previously, during the peak of the cryptocurrency boom, the cryptocurrency exchange FTX spent $1 billion to acquire a Bitcoin mining company on the steppes of Kazakhstan and $500 million to acquire the artificial intelligence company Anthropic.

In October last year, as cryptocurrency prices surged, a cryptocurrency offline store in Hong Kong displayed the USDT exchange rate.

Angermayer's Controversial Track Record

Angermayer's family office is located in Malta and operates Apeiron Investment Group, which connects investors and companies with talent. Apeiron has facilitated large investment deals for cash-rich buyers, but many of these investments have underperformed.

In 2017, Angermayer's family office helped HNA Group of China become the largest shareholder in the struggling German bank Deutsche Bank. After the transaction, the bank's stock price plummeted further. Years later, HNA Group sold off some of its shares due to a cash crunch. Ultimately, heavily indebted and under government scrutiny, HNA Group filed for bankruptcy.

HNA Group, based in Haikou, China, filed for bankruptcy in 2021.

Angermayer then partnered with the Japanese conglomerate SoftBank Group, which raised the world's largest venture capital fund to date. He introduced Wirecard, a German payment processor facing accounting fraud allegations at the time, to SoftBank.

SoftBank stabilized Wirecard by issuing $1 billion in convertible bonds. Both SoftBank and Wirecard paid Angermayer's family office millions of dollars in brokerage fees.

Months after receiving funding from SoftBank, Wirecard entered into a long-term partnership with the cybersecurity company Cyan AG, in which Angermayer and a business partner held a 27% stake. This business partner had also served as HNA's representative on Deutsche Bank's board. In this partnership, Angermayer facilitated introductions between Cyan and Wirecard executives.

One year after reaching a deal with SoftBank, Wirecard collapsed due to an accounting scandal. SoftBank sold bonds to investors who suffered heavy losses.

A source familiar with the matter said that Apeiron received a fee as an intermediary for the deal but was not involved in the negotiations and the deal itself. The source mentioned that Angermayer also facilitated several other smaller, contentious deals.

Recently, Angermayer and Apeiron have shifted their focus to what he calls the "vital agenda of the next human society," building a portfolio in areas such as cryptocurrency, longevity, and psychedelics. With the support of tech investor Peter Thiel, Angermayer co-founded Enhanced Games with others, advocating for sports events to adopt performance-enhancing drugs.

Angermayer and Northern Data

Angermayer is often seen in flamboyant shirts adorned with mushroom patterns. He has a tattoo of the chemical symbol for psilocybin (a neurotoxic psychedelic compound) on his forearm. He has hosted lavish birthday parties at a 17th-century Austrian palace and a cryptocurrency conference in the Bahamas. On Instagram, Angermayer showcases his dinosaur fossil and ancient sculpture collections.

Angermayer's personal life and work sometimes intertwine. In 2022, Apeiron marketed a new fund to investors named the "Apeiron Jurassic Fund One," aiming to raise $30 million to invest in dinosaur fossils. Draft promotional materials stated that the fund would leverage "a unique global network of bounty hunters," starting from Angermayer's fossil collection, which includes a juvenile T. rex and a sauropod. The fund was ultimately abandoned.

Angermayer's other investments include a significant stake in Northern Data, a publicly traded German Bitcoin miner that has recently pivoted to AI cloud-hosting services. Northern Data acquired two cryptocurrency mining companies in which Angermayer held stakes, and Angermayer received shares in the new entities. One of them was co-founded by a former employee of his family office.

Subsequently, Angermayer began raising funds for Northern Data and charging a service fee. Apeiron also charged fees to Northern Data for introducing investors. The fees included sponsorship and promotion at a cryptocurrency frenzy event in the Bahamas where former One Direction star Liam Payne performed shirtless.

A corridor of Northern Data's data center, which is situated in a disused Norwegian mine

According to Northern Data's financial statements, the company paid €840,000 (approximately $940,000) to Apeiron in 2022 for fundraising activities. Northern Data stated that the acquisition of these two cryptocurrency mining companies resulted in a total loss of €420 million. Current and former employees, along with the general downturn in crypto assets in 2022, indicate that Northern Data's financial situation is precarious as of early 2023.

However, a Northern Data spokesperson stated that the company has been operating as usual, with financial audit results showing the company's current capital adequacy.

Angermayer Finds Deep-Pocketed Tether

In spring 2023, Tether made its initial investment in Northern Data, spending €32.3 million to acquire a stake in the company. Sources familiar with the matter revealed that Tether sought to keep its involvement confidential. Angermayer received a 5% fee equivalent to 5% of the transaction value, marking his first fee for brokering a deal between these two companies.

Several months later, Tether acquired an additional €48 million worth of Northern Data shares. Once again, Northern Data did not publicly acknowledge Tether as its investor. A spokesperson for Northern Data stated that both companies met the disclosure requirements for the transactions.

Angermayer received a 5% fee from the second transaction. According to fee invoices reviewed by The Wall Street Journal, he received a total of €4 million in fees from these two transactions.

Subsequently, Tether began openly aiding Northern Data's foray into the artificial intelligence sector. Tether established an Irish company named DaMoon and lent €400 million to Northern Data to purchase advanced Nvidia H100 processors.

Tether CEO Paolo Ardoino described the company's investment in Northern Data as a "perfect deal".

Subsequently, Northern Data took over DaMoon. In return, Tether received newly issued Northern Data shares. Tether CEO Paolo Ardoino described the investment in Northern Data as a "perfect deal" on a podcast. He praised the company's management, structure, and team.

Following that, Tether provided Northern Data with a €575 million credit line, which has now been fully utilized. These transactions made Tether a majority shareholder of Northern Data. Last month, Northern Data announced plans to raise an additional €214 million (with €110 million coming from Tether) to purchase more processors.

A spokesperson for Northern Data refused to comment on whether Angermayer or Apeiron received fees due to the subsequent transactions. He stated that any fees paid by the company have been disclosed as required by law and accounting standards.

Based in the British Virgin Islands, Tether has achieved tremendous success. Investors like it because its cryptocurrency is stable, always valued at 1 US dollar. It has good liquidity and is well suited for commercial transactions. According to government indictments, USDT is also widely used in drug trafficking, terrorist organizations, and sanctioned countries. Government and bank officials have stated that regulators have increased scrutiny, with some banks refusing to do business with Tether.

Investors like Tether's cryptocurrency because of its stable value

Tether stated that it collaborates with global law enforcement agencies and has established and maintains world-class compliance processes to prevent money laundering, terrorist financing, and other risks.

Angermayer also helped Tether invest in another company, Blackrock Neurotech. He is the Co-Chairman of the Board and the largest shareholder of Blackrock Neurotech, a brain-machine interface manufacturer. Brain-machine interfaces are small electronic devices implanted in the brains of paralyzed patients. Based in Salt Lake City, the company has been developing this technology since 2008.

In 2021, Apeiron led a $10 million financing round for Blackrock Neurotech. Former employees have stated that while Angermayer served as the Chairman of the Board, Blackrock Neurotech sought to capitalize on the industry hype generated by Musk's Neuralink and actively pursued taking the company public.

However, Blackrock Neurotech's business development has hit a snag. Former employees say that after receiving investment, Blackrock Neurotech quickly expanded, doubling its workforce and developing new business lines. However, the company then went through a series of layoffs in 2022 and 2023.

Last summer, Angermayer and Apeiron led a $37 million investment round in Blackrock Neurotech. Former employees say the company burned through more cash and then made further layoffs.

Blackrock Neurotech has not responded to requests for comment.

In April of this year, Tether acquired a majority stake in Blackrock Neurotech for $200 million, valuing it at $3.5 billion. Tether stated that its business scope has expanded from merely providing a digital dollar alternative to brain chips, which will "empower humanity in the evolution ahead."

Entrance to a data center in western Norway housing the Northern Data computing center

Northern Data's stock trades on the German securities market and is currently considering a U.S. listing. According to a slideshow seen by The Wall Street Journal, some bankers driving Northern Data's U.S. listing said the company's value could reach $20 billion in a few years. Northern Data declined to comment on the potential U.S. listing.

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