By
Tolu Ajiboye
April 18th, 2024
Bloomberg has recently reviewed the bank statements of Tether for different months over the lasy year and found that they hold sufficient reserves to back its ciculating USDT supply.
The latest Bloomberg report puts some light on the long-time mystery of USDT‘s fiat backing. On Tuesday, December 18, the publication reported that Tether has got full fiat reserves backing its circulating USDT tokens. The publication further notes that it has reviewed the ‘bank statements’ of Tether’s Ltd.’s accounts. The report puts the fears and speculation, regarding Tether not having enough fiat reserves, to rest for the moment.
Bloomberg also notes that it has reviewed Tether’s bank account statements for four different months. Every time, Bloomberg found that Tether’s bank reserves were either equal to or more than the circulating USDT supply. Some of the bank statements were even shared with the regulators.
The report notes:
“One statement shows $2.2 billion was in Tether’s account at Puerto Rico’s Noble Bank Ltd. on Jan. 31. That same day, 2.195 billion Tethers existed, according to data compiled by Coinmarketcap.com. The numbers also match up in September and October 2017.”
A Year-Long Tether Mystery
Startup Tether launched its USDT stablecoin pegged to the U.S. Dollar last year. However, the company remains embroiled in a number of controversies surrounding the issuance of USDT tokens and its alleged relationship with crypto exchange Bitfinex. Interestingly, both Tether and Bitfinex share the same executives spiraling down further suspicions.
Allegations suggest that last year Tether issued a higher number of USDT without actually backing them with physical USD. Later the company even sourced these tokens to Bitfinex. Some of the previous reports suggest that Tether’s sourcing of extra USDT tokens led to Bitcoin price manipulation during the December 2017 bull run. Also, the demand for Tether tokens reached its peak at the same time.
Moreover, Bitfinex was the only platform to buy and sell Tether tokens during that time. Citing the bank statements, sources familiar with the matter said that there was a constant money flow between Tether and Bitfinex, during that time.
The suspicion of some foul play gathered steam by the end of 2017 after which U.S. investigative agencies considered stepping into this matter. Earlier this year, the U.S. Commodity Futures Trading Commission issued subpoenas to Bitfinex and Tether. While the investigation still continues, no concrete details have emerged so far.
Along with the CFTC, the U.S. Justice Department is also investigating Tether’s role in last year Bitcoin price manipulation. Stuart Hoegner, the general counsel for Tether and Bitfinex, refused to comment on the cash reserves. However, speaking on the CFTC inquiry, Hoegner wrote:
“As a company that takes its legal and compliance obligations very seriously, we are not in a position to comment on the discussions we have nor to acknowledge the existence of subpoenas or similar legal requests.”
Does This Mean End of All Troubles for Tether?
Well, not really! Although the latest bank statements reveal many details, they still don’t provide a complete accounting of the company’s finances. The Bloomberg report notes:
“To be sure, the bank statements reviewed by Bloomberg don’t show, for example, where the funds originated or where they are now. The statements were provided by someone with access to the company’s records, and a government official confirmed their veracity.”
Moreover, over the last year, Tether moved its deposits frequently across Puerto Rice, Montreal and other places. The report notes that Tether and Bifinex have been constantly losing banking partners over last three years. In 2017, Taiwanese lenders and Wells Fargo & Co. also decided to cut its banking relations with Tether.
Furthermore, Tether failing to have a fair and transparent third-party audit for its accounts still raises several doubts. Earlier this year Tether also dropped its relationship with accounting firm Friedman LLP.
As said above, besides the stockpile issue, Tether’s is also facing other charges of Bitcoin price manipulation. This goes to show that Tether is still not completely cleared of all charges levied upon the company.
However, amidst the recent market crash, Tether has managed to climb up in the top-five spot for sometime this Monday. Currently, Tether is at the number 7 position as per its market cap. Tether lost nearly $700 million of its market cap in the last two months but has managed to hold back off lately.