SCHEDULE 13D: Tether Entities Acquire Significant 32.6% Stake in Rumble Inc.

Tether Holdings, Tether Investments, and Giancarlo Devasini have collectively acquired 103.33 million shares of Rumble Inc.'s Class A Common Stock, representing a 32.6% beneficial ownership stake.

Summary

• Tether Holdings, S.A. de C.V., Tether Investments, S.A. de C.V., and Giancarlo Devasini (collectively, the "Reporting Persons") have acquired 103,333,333 shares of Rumble Inc.'s Class A Common Stock.
• This acquisition represents 32.6% of the outstanding Class A Common Stock of Rumble Inc.
• The shares were purchased on February 7, 2025, as a result of a Transaction Agreement entered into on December 20, 2024, between Rumble Inc. and Tether Investments Limited (with Tether Investments, S.A. de C.V. as successor).
• The Reporting Persons used cash from working capital as consideration for the shares.
• The investment is described as a strategic investment in emerging technologies, such as artificial intelligence and peer-to-peer platforms, sustainable Bitcoin mining operations, and digital education initiatives.
• The Reporting Persons have agreed to certain restrictions, including no right to designate board members or shareholder veto rights, and a one-year "standstill" provision restricting proxy solicitations.
• Transfer restrictions apply until beneficial ownership falls below 9.9%, limiting transfers to competitors or holders who would own at least 5% of Class A Common Stock.
• Rumble Inc. has entered into a registration rights agreement to facilitate the resale of the Reporting Persons' shares.

Sentiment

Score: 8

Explanation: The acquisition of a significant stake by a major entity like Tether is generally a positive signal, indicating strategic interest and potential for future collaboration or growth. The stated purpose of strategic investment in emerging technologies aligns with positive future outlook. However, the past regulatory issues of Tether introduce a minor cautionary note.

Positives

• A significant strategic investment by Tether entities, indicating confidence in Rumble's business and its focus on emerging technologies like AI and peer-to-peer platforms.
• The investment provides Rumble with a substantial capital infusion, as the shares were purchased for cash from working capital.
• The registration rights agreement provides a clear path for the Reporting Persons to potentially monetize their investment in the future, offering liquidity.

Negatives

• The Reporting Persons are subject to a one-year "standstill" provision, restricting their ability to engage in proxy solicitations or similar matters, which limits their immediate influence on corporate governance.
• Transfer restrictions limit the Reporting Persons' ability to sell shares to certain parties (competitors or large holders) until their beneficial ownership falls below 9.9%.

Risks

• The Reporting Persons, specifically Tether Holdings, S.A. de C.V., have a history of regulatory proceedings, including a $41 million civil monetary penalty from the U.S. Commodity Futures Trading Commission (CFTC) in October 2021 for alleged untrue or misleading statements regarding USDT backing.
• Tether and affiliated companies also settled a 2019 proceeding with the New York Attorney General (NYAG) in February 2021, paying $18.5 million in penalties and agreeing to discontinue trading activity with New York persons or entities and submit to mandatory reporting.

Future Outlook

The Reporting Persons may, from time to time, acquire additional shares, or retain and/or sell all or a portion of their beneficially owned shares. These actions will depend on various factors, including Rumble's business prospects, financial position, market conditions, and general economic and industry conditions. They reserve the right to formulate plans or make proposals concerning Rumble.

Management Comments

• "The principal business of Tether Investments, S.A. de C.V. is primarily to make strategic investments in emerging technologies, such as artificial intelligence and peer-to-peer platforms, sustainable Bitcoin mining operations, and digital education initiatives."
• "Tether Investments, S.A. de C.V. is also involved in funding and supporting projects that enhance financial inclusion and build resilient financial infrastructure worldwide."

Industry Context

This significant investment by Tether entities, known for their stablecoin operations and broader crypto ecosystem involvement, into Rumble Inc., a video platform, highlights a growing trend of convergence between the traditional tech/media sector and the blockchain/crypto industry. It suggests a strategic interest in decentralized or alternative platforms and emerging technologies like AI, aligning with Tether's stated investment focus on peer-to-peer platforms and digital education.

Corporate Governance

Legal Proceedings

• In October 2021, the U.S. Commodity Futures Trading Commission (CFTC) instituted and settled regulatory proceedings against Tether Holdings, S.A. de C.V. (then Tether Holdings Limited), Tether Limited, Tether Operations Limited, and Tether International Limited, resulting in a civil monetary penalty of $41 million without admitting or denying findings. Allegations related to untrue or misleading statements regarding USDT being fully backed by U.S. Dollars.
• In February 2021, the Office of the Attorney General of the State of New York (NYAG) entered into an agreement with Tether and several Bitfinex companies to settle a 2019 proceeding, resulting in $18.5 million in penalties and requirements to discontinue trading activity with New York persons or entities and submit to mandatory reporting.

Stakeholder Impact

• Shareholders: The entry of a significant strategic investor like Tether could be viewed positively, potentially signaling future growth and stability for Rumble. The large stake could also influence future share price movements.
• Management: The standstill and transfer restrictions provide a degree of stability and protection for current management against immediate hostile actions from the new large shareholder.
• Employees: A strategic investment could lead to increased resources and opportunities for growth, potentially benefiting employees through expansion or new initiatives.

Next Steps

• The Reporting Persons may acquire additional shares or sell existing shares of Rumble Inc. Class A Common Stock in the future.
• Rumble Inc. is obligated to file a registration statement on Form S-3 to register the resale of the Reporting Persons' shares, providing customary demand and piggyback registration rights.

Key Dates

Recommendation

Keywords

Rumble Inc., Tether Holdings, Tether Investments, Giancarlo Devasini, Class A Common Stock, Strategic Investment, SEC Filing, Schedule 13D, Beneficial Ownership, Digital Education, Peer-to-Peer Platforms, Artificial Intelligence, Bitcoin Mining, Corporate Governance, Registration Rights