Tether Holdings – the issuer of the most popular stablecoin, “Tether”– just responded to a Bloomberg article casting doubt on their operations. While Bloomberg claims that Tether’s $69B reserves are nowhere to be found, Tether calls their accusations fake news.
Tether’s Response to Bloomberg
Tether published their response to Bloomberg yesterday, on the same day Bloomberg’s accusatory article was released. Tether calls the piece a “one-act play” that cherry-picks old news from “dubious sources” to fit a defamatory narrative.
This article does nothing more than attempt to perpetuate a false and aging story arc about Tether based on innuendo and misinformation, shared by disgruntled individuals with no involvement with or direct knowledge of the business’s operations.
Bloomberg’s report includes a scathing claim from John Betts, the former CEO of Noble Bank International LLC. Having worked with Tether, Betts said that CFO Giancarlo Devasini had been risking Tether’s reserves on personal investments. “It’s not a stablecoin. It’s a high-risk offshore hedge fund,” he says.
Tether dismisses Betts’ claim in their report as one such “disgruntled” person, who they’d previously fired as their banker. They added that he engages in “egregious and wasteful self-dealing and seeking to enrich himself at Noble’s expense.”
Another of Bloomberg’s claims include that Tether has invested significant reserves in Chinese commercial paper. Tether did not respond to this criticism.
The response concludes by claiming that Tether’s reserves are, in fact, fully backed, citing a quarterly assurance attestation from June.
Notably, Tether’s CEO deleted his Twitter account shortly after the Bloomberg report surfaced online.
Suspicion of Tether
Tether has long been the subject of intense scrutiny and suspicion among financial regulators and the crypto community. While the company has released multiple attestations to prove adequate reserves, they are yet to conduct a full audit. Stuart Hoegner– general counsel of Tether– hopes to conduct such an audit soon.
Recently, Tether scored a major legal win after courts dismissed multiple claims that they’d conspired with Bitfinex to manipulate markets. Authorities filed the investigation in 2019, saying they’d issued unregistered USDT tokens to control markets.
Tether is the largest stablecoin by market cap and by far the most frequently traded cryptocurrency. It helps provide liquidity in the cryptocurrency market for frequent traders. Therefore, many have feared that a cryptocurrency market collapse could happen if Tether’s funds do not have backing.