Tether under fire again: How mining tax became reputational threat

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Tether under pressure: Northern Data mining tax scandal

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Oleg Tkachenko

03.10.2025

Tether under fire again: How mining tax became reputational threat — Tether under pressure: Northern Data mining tax scandal

German and Swedish prosecutors have raided the offices of Northern Data — a company linked to the largest stablecoin issuer, Tether. It is suspected of fraudulent activity involving bitcoin mining taxes. At first glance, this may seem like a local incident, but upon closer inspection it carries a bigger signal: the crypto industry is no longer a «lawless zone,» and regulators’ attention is tightening.

Swedish prosecutors suspect the company of VAT fraud amounting to over €100 million. And while Tether insists it has no operational involvement, the market once again finds itself questioning just how vulnerable the industry’s largest stablecoin truly is.

Reputation under pressure

Tether is both loved and hated by the crypto community. Loved for its liquidity: USDT is today the world’s largest stablecoin, with a market capitalization exceeding $110 billion and a market share of around 70%. It is the main bridge between traditional finance and cryptocurrencies.

But Tether is also hated for its lack of transparency. The company has repeatedly been the subject of investigations and criticism from regulators, journalists, and analysts. The Northern Data scandal is yet another stain, reminding the market of its past controversies.

What happened

At the end of September, German investigators, together with Swedish prosecutors, searched Northern Data’s offices in Frankfurt and Sweden. Four people were arrested on suspicion of tax fraud. Investigators claim the company submitted falsified tax filings to secure benefits on equipment for cloud computing and Bitcoin mining.

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The damages are estimated at €100 million. The European Public Prosecutor’s Office (EPPO) confirmed that the investigation specifically relates to taxation of mining operations.

Northern Data denies wrongdoing, arguing that authorities «fail to understand the tax treatment of processors used for cloud computing and mining.» Tether, for its part, quickly stated that although it holds a controlling stake in Northern Data, it has no role in operational management.

The tax at the center of the scandal

To understand the scandal, one must look at Sweden’s tax policy. Until recently, the country was attractive to miners thanks to cheap energy, a cold climate, and tax incentives. But in 2023, the rules changed. The electricity tax for data centers engaged in mining was raised from €0.006 per kWh to €0.36 per kWh — a 60-fold increase.

For the industry, this was a shock: at such rates, mining profitability plummeted. Unsurprisingly, some players sought ways around the new burden. According to Sweden’s finance ministry, many companies began reclassifying equipment as «cloud computing resources» or claiming benefits they were not entitled to. Northern Data ended up caught in this gray area.

Tether and the shadow of the past

This is not the first time Tether has faced regulatory scrutiny. In 2021, the U.S. Commodity Futures Trading Commission (CFTC) fined the company $41 million for false claims that every USDT was backed by a dollar. An audit revealed that at certain times only 27% of tokens were backed by fiat, with the rest consisting of loans and commercial paper.

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Later, the company agreed to disclose some reserve data, but full transparency never materialized. Within the crypto community, this sparked heated debate. Blockstream CEO Adam Back wrote at the time:

«Tether remains the Achilles’ heel of the entire market. Until we see full transparency, the risk of systemic failure won’t go away.»

This is why every new scandal surrounding Tether is perceived not as an isolated story, but as a potential threat to the entire ecosystem.

Why it matters for the market

USDT has long been the «lifeblood» of the crypto market. It is used on all major exchanges and underpins trading in altcoins and DeFi protocols. According to CoinMetrics, more than 80% of trading pairs on centralized exchanges involve USDT.That is why every investigation involving Tether, even indirectly, unnerves the market. Investors still remember the collapse of a major stablecoin issuer — TerraUSD in 2022 — and how it triggered a broader industry meltdown.

Renowned economist and crypto critic Nouriel Roubini recently warned:

«The market ignores systemic risks as long as everything works. But one day, this could bring the entire ecosystem crashing down.»

Europe’s wariness of mining

The Northern Data scandal fits into a broader trend: Europe is becoming increasingly hostile to mining. Beyond Sweden, restrictions are being discussed in Norway, Germany, and France. The main concern is energy consumption. According to Cambridge University, annual bitcoin mining energy usage rivals that of entire countries like Argentina. For Europe, pursuing a «green transition,» this is a major challenge.

As a result, many companies are relocating operations to the U.S., Kazakhstan, or Latin American countries, where taxes are lower and energy is cheaper. But even there, regulators are starting to ask difficult questions.What this means for Tether and the industryThe Northern Data case is not just a €100 million tax scandal. It is part of a global trend: governments are no longer willing to tolerate the crypto economy’s «gray zones.» Mining in Europe is becoming expensive and risky, while stablecoin issuers are facing mounting regulatory scrutiny.For Tether, this is yet another test: the company must once again prove to the market that its business is resilient. For the crypto industry as a whole, the lesson is clear: the era of operating «by custom» rather than by law is ending. Those unwilling to adapt to the new rules risk being left behind.

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