The review of documents obtained by the attorney general’s office in New York regarding the USDT reserve backing reveals a trail of assets owned by Chinese companies. The reverse statements relate to the 2021 investigation on whether the largest US dollar-pegged stablecoin by market capitalization relied on backing by Chinese securities.
Trail of Chinese Companies Securities in Tether’s Reserve Statement
The documents were investigated following the long-running suspicions that the USDT stablecoin relied upon Chinese securities. An investigation conducted by Bloomberg News revealed in October 2021 that Tether reserves had billions of short-term loans advanced by Chinese entities.
The documents were accessed from the attorney general office in New York following the expression of information request freedom applied by CoinDesk.
The debate on the reserve statements surfaced in July 2022 when Tether dismissed the allegations that 85% of the commercial paper portfolio featured backing by short-term debt advanced by Asian or Chinese entities. The recent documents reveal that it depends on several Chinese securities to back the USDT stablecoin. The in-depth analysis of reserve statements shows the existence of debt advanced by the Agricultural Bank of China Ltd, China Construction Bank Corp., and Industrial $ Commercial Bank of China Ltd.
Further analysis shows that Tether holds securities advanced by other foreign entities besides Chinese entities. In particular, the documents indicate that Tether used securities issued by Barclays Bank and Deutsche Bank to support its USDT stablecoin reserves.
Clowns and Critics of Tether’s Solid Reserves Outclassed by the Statements
The USDT stablecoin commands dominance through its market capitalization with an estimated valuation of $83.55 billion to rank the third largest crypto asset after Bitcoin and Ethereum per Coinmarketcap. Although its daily trading volume plunged by 40% to $14.530 billion, it commands the lead traded token in the past 24 hours.
Tether’s chief technology executive Paolo Ardoino stated that the review of the documents proved Tether’s critics wrong on the speculation that it operated without a bank account. His views on Chinese securities emphasized that the documents vindicate Tether’s stance to dismiss a few clowns alleging it held debt from the embattled Chinese property developer Evergrande.
Ardoino trolled the Tether detractors who have in the past attempted to convince the digital assets community that it runs USDT stablecoin with 70% Evergrande backing. The chief technical officer did not dismiss the genuinity of the reserve documents that media outlets claim stem from investigations initiated by Letitia James in April 2019 as the serving New York Attorney General.
Tether Relents Opposition to Access Documents
Tether’s reserve statements became a subject of scrutiny when Letitia’s office was investigating the BitFinex crypto exchange. The investigation sought to ascertain if BitFinex was concealing an $850 million loss from the investors and $700 million held in Tether’s reserves, dubbed the ‘BitFinex slush fund.’ The attorney general settled the matter in February 2021, with the two firms banned from executing business within New York state.
Tether has resisted previous attempts by various parties to access the investigative documents in the case. However, it relented the resistance on June 15 in a statement conveyed via its official blog. Tether indicated dropping the stance to oppose the request submitted on transparency grounds.
Tether Questions the Timing of Access to Reserve Documents Amidst Attacks on USDT
Tether’s statement indicated it was actively monitoring the markets after alleging collusion by other crypto industry participants against it. Notably, Tether found it suspicious the coincidence of attacks targeting USDT through decentralized finance (DeFI) and centralized exchanges only when Coindesk accessed the materials. The blog indicated that the timing was questionable.
Meanwhile, Tether (USDT) momentarily depegged on the dollar peg to exchange hands at $0.996. Ardoino attributed the dollar peg wobbles to the eddy market trend. He decried the move by Tether’s attackers to leverage the sentiment. He assured the community of Tether’s readiness to handle redemption of any amount.
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