Tether has completed its quarterly reporting responsibilities since its deal with the New York Attorney General’s Office. Tether remains dedicated to openness and respects its customers’ privacy and security above anything else.
Following this agreement, CoinDesk requested public disclosure of information about Tether’s first quarterly report under FOIL. Tether has previously resisted this disclosure to avoid the public release of critical proprietary information and confidential customer data, both of which might be used by bad parties. Tether abandoned its resistance after vehemently defending it, granting CoinDesk and other journalists access to these papers to demonstrate its commitment to transparency and openness above additional, ineffective US litigation.
Two years ago, Tether was in a significantly different circumstance than it is today. It proved that its reserves are extremely liquid, of high quality, and ready to support any size of redemption by leading the industry during the most significant black swan events in 2020 and 2022. This was demonstrated in 2022 when Tether repaid US$7 billion in 48 hours, roughly 10% of its reserves at the time. This is only one example of the power Tether may possess when its infrastructure is put to the test by users.
In the most recent testimony, Tether’s transparency regarding its loan scheme is unmistakable. There is nothing new to announce since Tether has continually maintained its commitment to transparency. Tether has never and will never jeopardize the integrity of its reserves. This has been demonstrated several times, not only by its unwavering capacity to perform redemptions without hesitation but also by the complete openness of its reserves.
Tether’s dedication to upholding the highest standards extends to the meticulous establishment of risk measurements and risk monitoring systems. These strong systems enable the company’s investment and finance teams to properly assess the risk associated with any of its financial engagements. Tether works proactively to achieve and sustain its business objectives while keeping its unshakable risk management culture, with a firm awareness of both the loan industry and the regulatory landscape.
Furthermore, the bulk of Tether’s commercial papers has consistently been rated A2 or higher. No changes have been made to any of our previous statements. They are resolute in their commitment to accountability and upholding the highest standards.
If correctly read and comprehended, the provided material merely confirms publicly the legitimacy of Tether’s company and the existence of its reserves. But, as has happened many times before, the material is purposefully chosen in isolation or misrepresented to begin a clickbait story, both for Tether and the whole crypto sector.
Tether is delighted to be the most popular stablecoin and a positive force in the community. The firm takes pride in its reserves’ deep liquidity, resilience, and stability, which have been tested through many black swan occurrences that have destroyed portions of the crypto sector as well as the traditional financial system. Tether will always protect its customers, employees, and community from assaults.
Tether wishes to give a factual point of reference for what the materials do and do not contain once this information becomes available.
- As evidenced by our publicly-disclosed, independent, third-party assurance attestations, the papers released include declarations from Tether’s banks demonstrating the entire existence of its banking ties and reserves.
- The statements demonstrate how Tether has used best-in-class asset management strategies, such as short-term investments and diversification, as seen by the investments indicated in the different bank statements.
- Since the data obtained by media outlets only gives a limited image of historical data that is more than two years old, the materials do not portray Tether as it is now. Tether, among other things, reduced its holdings of commercial paper to zero by the middle of 2022 and drastically reduced its secured loan portfolio intending to make it zero in the upcoming months.
Tether was the first to disclose the composition of its reserves and continues to provide quarterly assurance attestations completed by independent accountants. Tether’s attestations evolved, providing more transparency compared to earlier ones provided to the New York Attorney General’s Office. Tether’s latest attestation showed a record net profit of US$1.48 billion, which brought Tether’s reserves surplus to another record high of US$2.44 billion, and a reduction of bank deposits by over 90%.
The attestation also demonstrates that Tether is keeping its promise to wind down its secured loans from 8.7% to 6.5% until they are zero and that its holdings of US Treasury bonds have reached a record level of over US$53 billion, or more than 64% of its total reserves.
Tether is dedicated to remaining a crypto transparency leader, and their continual activities in providing information to the community and its stakeholders, as well as exhibiting complete support, attest to that dedication.
Tether often collaborates with law enforcement, having supported more than 150 investigations on four different continents. In response to requests from the government and law enforcement, Tether has recovered nearly $200 million in USDT in the last 18 months alone and returned it to its lawful owners.
Finally, the choice to disseminate this information to its readers by Bloomberg, CoinDesk, or any other media source was most likely made in haste, with little regard for current events or facts. Tether does not encourage this behavior, but their priority is their clients and their continuous support of the crypto community.
______________________________________________________________________________________________
What took place on June 15, 2023?
The most well-known stablecoin, Tether, completed its reporting duties to the New York Attorney General’s Office early this year by the terms of the 2021 settlement. That agreement required quarterly reports on Tether’s reserves for the next two years. Tether completely met its commitment, and there has never been any indication that the disclosures were inadequate or that the reserves were ever insufficient. They are relieved to have accomplished their settlement duties. With the highest market price in history, Tether is now stronger than ever.
CoinDesk and other parties requested public disclosure of documents connected to Tether’s first quarterly report under New York’s Freedom of Information Law shortly after the settlement in 2021. The New York Attorney General’s Office submitted response papers to CoinDesk and others on June 15, 2023. They made these records available because Tether chose to withdraw its resistance to the FOIL inquiries.
Why didn’t Tether/Bitfinex nail the appeal?
Tether started these procedures in the first instance to avoid the public disclosure of personal customer data as well as the usage of sensitive commercial information that might be misused by harmful parties. Their continued and demonstrated commitment to transparency, on the other hand, implies that they must choose openness above any time-consuming and ineffective US litigation that distracts from the fundamental concerns confronting their community.
Why wait until now to quit battling if Tether/Bitfinex were going to reveal this information? Why was this particular point in the proceedings chosen?
Tether has to decide whether to complete its appeal at this stage in the proceedings. The sensitivity to this information becoming public has changed from two years ago, at least in terms of Tether’s reserves. At this point, they must favor openness above more time-consuming and ineffective US litigation that distracts from the fundamental concerns confronting our community.
Is Tether/Bitfinex in favor of disclosing consumer information to press outlets?
Not. One of the reasons Bitfinex and Tether opposed CoinDesk’s FOIL case was to avoid the public distribution of user data. They urge CoinDesk and others not to publicly reveal any former or current client names to avoid putting anyone in the community in physical or digital danger.
Were they compelled to intervene in this matter?
Not. Tether started these procedures in the first instance to avoid the public disclosure of personal customer data as well as the usage of sensitive commercial information that might be misused by harmful parties. They continue to urge CoinDesk and others not to publicly reveal any past or present client names to avoid putting anyone in the community in physical or digital danger. They might have pursued the appeal, but their continued and evident commitment to transparency requires them to choose openness above further time-consuming and ineffective American litigation that distracts from the genuine challenges confronting their community.
Tether mentioned not being familiar with Chinese commercial paperwork.
That is incorrect. Tether has consistently dismissed crazy allegations about having exposure to, say, Evergrande. Again, that was wrong, as evidenced by recent revelations.
But why is there so much exposure to Chinese commercial paper?
Tether’s exposure to Chinese commercial paper was mostly in the banking sector, although all Chinese paper owned was liquid and issued by major and well-known worldwide commercial paper issuers. Most of this paper was and is held in conservative portfolios by some of the biggest investment managers in the world. All of these issuers were reliable. A1 was the rating of the commercial paper that a Chinese bank issued.
It’s also important to note that Tether’s holdings in commercial paper were reduced to zero last year. Commercial paper, especially Chinese commercial paper, didn’t cause Tether any losses.
What function did Bitfinex play in the context of reserve adequacy?
Bitfinex was the borrower on an interest-bearing loan that was entirely repaid ahead of the deadline in 2021. That loan facility is no longer available and will not be reactivated. Bitfinex has also been Tether’s preferred BTC purchasing platform. Tether is classified as an ordinary user. All of these issuers were dependable, and the majority of this paper was and continues to be held in conservative portfolios by some of the world’s largest investment managers. A1 was assigned to a commercial paper issued by a Chinese bank.
Tether has authority over collateral wallets. What are the clients that are supplying this collateral? What is the collateral worth?
Tether has complete control over collateral wallets. The collateral is priced at market value, and an effective margin call mechanism has been developed. Tether has traditionally participated in loan transactions to a restricted set of bigger Tether clients, as specified in their independent, third-party assurance attestations. Tether has never lost a dime on these loans since they are overcollateralized, unlike others in traditional finance and elsewhere in the community who have engaged in pinky-swear lending. Tether represents financial independence and does not reveal its clients’ names to maintain their privacy. They urge anybody who receives this information not to reveal wallet addresses, names, or other identifying information that might jeopardize the safety, security, and privacy interests of third parties.
Individual and business accounts for several clients were closed. Should these accounts have been established at all?
They regret that these names may be made public by media outlets since Tether values its customers’ privacy. It’s important emphasizing that if the information is made public, it will be made public not by Tether, but by the New York Attorney General’s Office and media outlets. They do not wish to comment on specific relationships, but everyone passed the thorough compliance checks needed by Tether’s compliance procedures during onboarding and continuous monitoring.
Since Tether is so open, can it share the docs with everyone?
No. They have abandoned efforts to halt CoinDesk and others to favor transparency over more time-consuming and ineffective US litigation that diverts attention away from the fundamental concerns confronting their community. However, this is not the same as their disclosing the information. They continue to feel that the information included in these disclosures might be utilized to dox current and/or prospective clients. Furthermore, their compliance procedures might be used to evade their safeguards and weaken their terms of service. They will not put their consumers at risk or subject themselves to legal liability by disclosing this information.
