Stablecoin issuer Tether had its funds spread across multiple institutions in March 2021, including four banks, two investment management firms, two gold depositories, a gold broker, and its own sister company, Bitfinex, according to documents obtained by CoinDesk. These records also reveal Tether’s extensive reliance on commercial paper as backing for its large stablecoin market capitalization.
This information was made available through a Freedom of Information Law request filed with the New York Attorney General’s office (NYAG). The documents serve as a rare yet limited snapshot of Tether’s financial operations and asset storage locations, which have long been subjects of controversy within the crypto community.
Tether (USDT) is the world’s largest stablecoin, playing a pivotal role as a counterparty asset for crypto trades on numerous exchanges. It is designed to hold its value against the U.S. dollar, with Tether claiming to hold at least a dollar’s worth of assets as reserve for every single USDT token.
However, the company has faced several concerns regarding whether USDT has been fully backed by appropriate assets. In the past, Tether has loaned significant amounts of its reserves to Bitfinex, an exchange which shares corporate officers and parentage, ultimately raising questions about its asset management practices.
The newly released documents, created six months after NYAG’s investigation into Tether settled, do not conclusively prove or disprove the company’s claims; but, they provide further insights into Tether’s asset storage locations and include details about the backing of its stablecoin. Among the institutions mentioned in the documents are Ansbacher (Bahamas) Limited, Capital Union Bank in the Bahamas, and Far Eastern International Bank in Taiwan. Deltec Bank and Trust in the Bahamas held the majority of Tether’s assets at the time, amounting to over $26 billion.
As of March 31, 2021, Tether claimed to have over $35.5 billion in U.S. dollar equivalents across these institutions, in addition to $5.1 billion in “USDT lending” and other assets. Although information related to actual fixed-term deposits was redacted, the documents reveal that Tether held hefty reserves in certificates of deposit, bonds, and especially commercial paper.
Commercial paper issued by various entities, such as Qatar National Bank QPSC, Barclays Bank PLC, Deutsche Bank AG, Emirates NBD Bank PJSC, Natwest Group PLC, and many Chinese banks and financial institutions made up a considerable portion of Tether’s backing. These findings shed light on the extent to which Tether relied on commercial paper assets, a previously unknown fact.
Despite the additional information, the ongoing debate about Tether’s financial operations and asset backing remains unresolved. The documents do, however, contribute to a clearer understanding of its banking relationships and asset management practices in the midst of existing concerns and conjectures within the industry.
Source: Coindesk
