When you're trying to raise money at a half-trillion-dollar valuation, the last thing you need is existing investors dumping shares at a 40% discount. Tether (USDT) just learned this lesson the hard way.

When Shareholders Go Rogue

Tether Holdings is currently pursuing a stock sale that would value the stablecoin giant near $500 billion. But according to a Friday report from Bloomberg, at least one existing shareholder had other plans—attempting to offload at least $1 billion worth of shares at a valuation closer to $280 billion.

That's not great when you're trying to convince new investors your company is worth nearly twice as much. Tether executives quickly moved to shut down the proposed transaction, warning that management was "concerned such transactions could undermine a broader capital raise expected to reach $20 billion."

The company didn't mince words: "It would be imprudent, and indeed reckless, for any investor to attempt to circumvent the established process."

Blockchain to the Rescue?

So what's the solution when investors want out but you can't let them sell at whatever price they choose? Tether is exploring two main options, starting with tokenization.

The idea is to represent Tether shares digitally on a blockchain, which could provide some liquidity without opening the floodgates to unrestricted secondary trading. Tokenization has been gaining momentum across financial markets for its promise of faster settlement and lower transaction costs.

Tether isn't exactly new to this game—the company launched its own tokenization platform called Hadron back in November 2024. The platform handles digital representations of various assets including stocks, bonds, and commodities. Other major players like Galaxy Digital, Kraken, and Robinhood have also been testing tokenized equity products recently.

The Buyback Alternative

Tether is also considering share buybacks as a way to provide exits for early investors and employees. This approach has become increasingly common among large private fintech and crypto companies that aren't ready to go public.

Ripple (XRP) has already gone this route, repurchasing more than 25% of its outstanding shares in recent years. Even Revolut recently offered to buy back employee shares, though at a 30% discount to its latest $75 billion fundraising valuation, according to the Financial Times.

The elephant in the room? Tether hasn't set any timeline for an initial public offering. Without alternative liquidity mechanisms, investors could be stuck waiting years for an exit. That's exactly the kind of pressure that leads to desperate shareholders trying to dump stock at steep discounts—which is precisely what Tether is now trying to prevent.