As crypto has moved from finance’s fringes to its mainstream, investors have increasingly relied on stablecoins © FT montage/Bloomberg/Dreamstime
Jean-Louis van der Velde’s career offered few clues that he would become a key figure in fast-growing industry
The chief executive of Tether ran a company that faced a string of lawsuits in China over unpaid bills and fines for late tax payments before he helped launch the contentious stablecoin now at the heart of the crypto industry.
As crypto has moved from finance’s fringes to its mainstream, investors have increasingly relied on stablecoins, digital tokens backed by real-world assets, as a means to buy and sell volatile currencies such as bitcoin.
But as Tether’s role in the crypto universe has mushroomed since it was founded in 2014, with $78bn of its stablecoins now in circulation, so has scrutiny from regulators. The company’s rapid rise has also turned the spotlight on publicity-shy chief executive Jean-Louis van der Velde.
The 58-year-old Dutch native’s career, spanning IT sales in Hong Kong, Germany’s software industry and an ailing Chinese electronics manufacturer, gave few hints of the significant role he would later assume.
Legal and corporate records for the first time shed light on van der Velde’s tenure running Huashun Electronics, a Shenzhen-based company that made products such as television receivers and amplifiers for export and that he took control of in 2006.
From 2009, Huashun came under pressure from creditors chasing a growing pile of bills, according to records from a Chinese court and court orders compiled by data provider Tianyancha.
“The company was poorly managed and it could not repay the money,” Yang Hebing, one creditor whose companies supplied metal parts to Huashun, told the Financial Times.
Cryptocurrencies: how regulators lost control
Yang sued Huashun and van der Velde in 2012 but neither responded, court records in Shenzhen show.
Almost a decade on, van der Velde, who has spent much of his life in Hong Kong since leaving the Netherlands in his 20s to attend university in Taiwan, continues to technically own Huashun through an offshore entity called Perpetual Action Group (Asia) Inc, or PAG Asia, Chinese government records show. The entity has also owned a slice of Tether.
Below the radar
Huashun’s business in China now appears mostly defunct and regulators have added it to their list of “seriously untrustworthy and law violating” companies, government records show, a designation that precludes van der Velde, who remains its chair and legal representative, from running other companies in China.
Today, van der Velde helps oversee tens of billions of dollars’ worth of assets at Tether, a far cry from the sums Huashun was chased for only a decade ago.
Registered in the British Virgin Islands, Tether issues an eponymous token, also known as USDT, that is pegged to the US dollar through reserves. Though initially Tether said it would hold reserves in cash, today its token is backed by assets including commercial paper, treasuries and other digital tokens, according to the company’s disclosures.
The company has been fined tens of millions of dollars by US regulators this year over its past disclosures about its reserves. Last month, the US Senate banking committee demanded information from van der Velde about Tether’s operations as part of a broader probe into stablecoins.
While US politicians race to gather more information on Tether, even some of the group’s biggest customers say they have had few dealings with its chief executive.
Sam Bankman-Fried, the chief executive of FTX, the Hong Kong-based cryptocurrency exchange recently valued at $25bn, told the Financial Times earlier this year that he had only met van der Velde once in person.
“My sense is that he’s less involved in the external operations aspect of the business and more involved in internal management and leadership,” Bankman-Fried said. Another cryptocurrency executive who has had dealings with Tether’s management put it more bluntly: “I don’t know a lot about JL and most people don’t.”
Van der Velde has a minimalist online presence including a LinkedIn page that says he never checks it — “More hassle to close it,” the page says. He also has an old YouTube account under the name “snarfintel” where he has shown an interest in the Thai martial art Muay Thai.
Though he goes by Jean-Louis or JL, his formal name is Ludovicus Jan. He is also chief executive of Bitfinex, a sister crypto exchange to Tether. An official Bitfinex biography notes that he speaks five languages.
In a statement addressing questions from the Financial Times, Tether said that “rather than focusing on the importance of stablecoins, more specifically Tether and its role within the crypto ecosystem, the questions seem fixed on the hopes of uncovering non-secrets from the past of a successful entrepreneur.
“Tether is focused on its longstanding commitment to transparency and role as industry leaders and will not waste time responding to questions that are unrelated to its business,” the company added.
A hard-working individual
For a period in the 1990s, van der Velde worked as a Hong Kong salesperson for Lung Electronics, a tech reseller whose products included VitaCool, which would supposedly turn addictive nicotine into healthy vitamins. Tether previously told the FT that he only sold its IT products.
In 1999, van der Velde joined IGEL, a Linux software business acquired the previous year by Infomatec, a listed company in Germany that collapsed amid fraud allegations in 2001.
Van der Velde then co-founded Tuxia, which bought back the IGEL assets as Infomatec began to unravel in late 2000. Tether previously told the FT that the former IGEL team had founded Tuxia to buy back the company because of their concerns about Infomatec’s management.
A CV submitted to China’s business regulator in 2006, and seen by the FT, states that van der Velde had been “the president of a publicly listed company in Germany for many years”, without specifying which one.
Holger Ippach, who was chief technology officer of Tuxia and is now an executive in Silicon Valley, said that he recalled the experience of working with van der Velde as “very positive throughout”, describing him as “a great colleague and a hard-working individual”.
In 2002, van der Velde left Tuxia. A venture he incorporated the following year called Seki Technologies has left little trace. He took control of Huashun in 2006 through PAG Asia, also a British Virgin Islands entity and sister company to a similarly named electronics business run out of Monaco by Giancarlo Devasini, the chief financial officer of both Tether and Bitfinex.
A lot of trust there
PAG Asia “exported electronics products to large resellers like Best Buy and Tesco,” Tether previously told the FT, adding that Monaco PAG was independent from PAG Asia, though van der Velde and Devasini “had some level of involvement with both companies”.
A person familiar with their relationship said that Devasini rather than van der Velde ultimately “runs the show” at Tether. “They know each other going way back,” the person added. “There’s a lot of trust there.” Tether has said both play “vital roles at Bitfinex and Tether”.
Devasini’s own business career before Tether was at times troubled, the FT previously reported, as one of his businesses faced a claim about alleged patent infringement — a claim he and the entity rejected — and his Milan-based businesses collapsed after a fire in 2008.
It was the following year that unpaid bills began to accumulate at Huashun. The company had been producing about 3m pieces of equipment a year from a nondescript factory on the outskirts of Shenzhen when van der Velde took control.
A court first ordered Huashun to repay a creditor Rmb6825 ($1,068) in 2009, according to court orders compiled by Tianyancha. Starting in June 2011, Huashun stopped paying Yang for the parts it was receiving and nine months later owed him about Rmb64,000, separate court records in Shenzhen show.
When Yang sued no one appeared in court nor offered any written response to the claims, prompting a judge in Shenzhen to double the amount owed to Yang. Yang told the FT he never received full payment.
By 2013, Huashun was ordered to repay about Rmb500,000 in more than a dozen judgments, the records show. The company was also fined a small sum for “illegal patent behaviour” in 2012 and frequently owed back taxes with fines for late payment, the Tianyancha records show.
Although the records suggest Huashun’s creditors were unhappy, others recall their relations with van der Velde in far more positive terms.
Shih-wei Liao, an associate professor at the National Taiwan University who has known the Tether chief for more than 30 years, said van der Velde had made a big contribution to students on a blockchain course they ran together, particularly in teaching ethics.
“I am apprehensive of those CEOs who tell our students you can come do AI and blockchain and earn big money. But he is different,” Liao said of van der Velde. “He gave his time and not just money.” Additional reporting by Kathrin Hille in Taiwan and Xinning Liu in Beijing
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