SNEAK PEEK
- Newly obtained documents confirm Tether’s USDT stablecoin is backed by Chinese securities.
- Tether’s reserves include assets from Chinese companies and foreign businesses like Deutsche Bank.
- The disclosure vindicates Tether against accusations of lacking a bank account and holding Evergrande debt.
Newly obtained documents from the New York Attorney General’s Office have confirmed suspicions that Tether’s USDT stablecoin, a U.S. dollar-pegged cryptocurrency, was backed by Chinese securities.
The documents shed light on Tether’s reserves, revealing that it included assets belonging to Chinese companies, such as the Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., and Agricultural Bank of China Ltd. Furthermore, Tether held securities from other foreign businesses like Deutsche Bank and Barclays Bank to support its reserves.
These revelations come after Tether faced scrutiny and rejected claims in July of last year that a significant portion of its commercial paper portfolio was backed by short-term debt issued by Chinese or Asian companies. However, an investigation conducted by Bloomberg News in October 2021 had already indicated that Tether held billions in short-term loans to Chinese firms, aligning with the recently disclosed documents.
Tether’s Chief Technology Officer, Paolo Ardoino, took to Twitter to address the revelations. Ardoino emphasized that the documents validated Tether’s stance against its critics, particularly regarding allegations that it lacked a bank account. He also pointed out that the disclosures vindicated Tether against accusations of holding debt from the troubled Chinese property developer Evergrande, referring to those who made such claims as “clowns.”
As announced yesterday @Tether_to decided to stop the opposition to the FOIL matter in the U.S., in favor of transparency for our industry.
Today the information has been digested and used by few media outlets, starting from Bloomberg. Others will follow soon.
The information… https://t.co/RhiUrZoh09
— Paolo Ardoino ? (@paoloardoino) June 16, 2023
Interestingly, Tether initially resisted providing access to the investigative documents but ultimately relented on June 15. In a blog statement, the company explained that it dropped its opposition based on transparency grounds and also mentioned its vigilance in monitoring markets, hinting at potential collusion within the industry against Tether.
Tether’s decision to share the documents with CoinDesk coincided with a significant attack on USD₮, not only through decentralized finance (DeFi) platforms but also centralized exchanges. This timing raised questions for Tether, suggesting a possible correlation between the document disclosure and the orchestrated assault on its stablecoin.
The newfound clarity regarding Tether’s reserves and the inclusion of Chinese securities may have far-reaching implications for the stablecoin market. The revelation of Tether’s holdings adds another layer of complexity to the ongoing discussions surrounding stablecoin regulation, highlighting the need for greater transparency and scrutiny within the industry.
Consequently, market participants and regulators alike will likely scrutinize Tether’s operations more closely, considering the potential risks associated with its reserve composition.
Overall, these developments have brought the Tether controversy back into the spotlight, necessitating a more comprehensive examination of stablecoin practices and regulations to ensure the stability and integrity of the cryptocurrency ecosystem.
