Tether Invests $775 Million in Rumble

Tether, the world’s largest stablecoin issuer, has made a strategic investment of $775 million into the YouTube-alternative platform Rumble, according to a Reuters wire. This move seems to deepen Rumble's connection with the crypto industry, as the platform announced last month that it would allocate up to $20 million of its excess cash reserves to bitcoin.

Shares of Rumble, which had been steadily declining after recent interest rate news from the Federal Reserve, were down 1% at market close on Friday at 4:00 p.m. ET. However, following news of Tether's investment, the stock surged as much as 44.6% in aftermarket trading, according to Yahoo Finance.

Amid rising interest rates, Tether’s profits from yields on USDT's backing assets have soared, bringing in $2.5 billion in net profit in Q3 2024 alone. Consequently, Tether has shown increasing interest in strategic investments, expanding under the leadership of newly appointed CEO Paolo Ardiono into sectors like AI, bitcoin mining, and decentralized messaging.

Notably, Tether’s investment in Rumble reflects Ardiono’s focus on censorship-resistant communications. A division at Tether is working to develop the Keet app, a peer-to-peer chat and video conferencing tool built using technologies from Ardiono’s other company, Holepunch.

Rumble will allocate $250 million of the funds “to support growth initiatives.” The remainder will fund a self-tender offer for up to 70 million of its Class A common stock at $7.50 per share — the same price as Tether’s investment. Rumble chairman and CEO Chris Pavlovski will maintain his controlling stake and stated he would not sell more than 10 million of his stock holdings. Tether will purchase a total of 103,333,333 shares.

“Many people may not realize the incredibly strong connection between the cryptocurrency and free speech communities, which is rooted in a passion for freedom, transparency, and decentralization,” Pavlovski noted, highlighting that the investment represents “an immediate liquidity event for all of our stockholders.”

In Q3, Rumble generated revenue of $25.1 million, a 39% year-over-year increase, despite posting a net loss of $31.5 million (up from $29 million in Q3 2023). The platform boasts approximately 67 million average monthly active users and primarily serves a conservative audience. Rumble’s cloud services support Truth Social. Notable investors in Rumble include Peter Thiel, Vivek Ramaswamy, and Vice President-elect JD Vance, who invested in 2021 at a $500 million valuation.

Cantor Fitzgerald & Co. is acting as the placement agent and dealer manager for Tether's investment.