Tether is the leading bridge currency between fiat money and crypto assets, has a capitalization of $66 billion and a daily turnover of $88 billion. The stable operation of crypto exchanges depends on the financial condition of the company of the same name, the vast majority of which use Tether as the base currency. According to the company’s initial statements, there is a full-fledged US dollar behind each USDT, but audits have shown the inconsistency of this statement.
Now the company is trying to hide the real state of affairs from the public
This year, the investigation of the New York State Attorney General’s Office (NYAG) was completed: as part of the pre-trial settlement, Tether agreed to pay $18.5 million and provide the authorities with a report on reserves on an ongoing basis (for more details in our article). At the same time, it turned out that half of USDT’s reserves are undisclosed commercial papers, and less than 4% is stored directly in fiat.
The volume of reserves exceeds liabilities, but their structure raises a lot of questions: in the event of a crisis, the inability to convert Tether at the rate of 1:1 to USD will lead to a sharp drop in the value of the stablecoin, undermine confidence in crypto exchanges, and cryptocurrencies will experience a stronger correction than in May of this year.
It is not surprising that the community is closely monitoring the state of affairs in Tether, but the company is not satisfied with such attention. On August 31, representatives of the organization appealed to the Supreme Court of New York with a request to prohibit news agencies from accessing the state of reserves:
“… we strongly oppose the idea of disclosing our confidential information simply to satisfy the curiosity of Internet trolls or other ill-wishers …”
Now it depends on the decision of the Supreme Court whether more detailed information will be disclosed, in particular, which commercial papers make up half of the USDT collateral. If the assets turn out to be low-grade, it will undermine the credibility of the token and cause unrest in the cryptocurrency market.