December 18, 2018 10:25 PM
Banks statements show that Tether could back up its claims, at least during those points in time for which documentation is available.
The question of whether Tether has the fiat reserves to back up its stablecoin has been hotly debated for months. However, a December 18 article in Bloomberg suggests that Tether did, in fact, possess the required fiat reserves to back up the USDT, at least for the months covered by the bank statements seen by Bloomberg.
Bloomberg admits that the documents it reviewed are not a comprehensive overview of Tether Ltd.’s financial situation. However, the documents seemingly provide more information relating to Tether’s fiat reserves than the company’s past attempts at transparency.
According to the article, one of the bank statements reviewed by Bloomberg disclosed that on January 31, 2018, the balance of Tether’s bank account at Puerto Rico’s Noble Bank Ltd. was $2.2 billion. According to Coinmarketcap.com, 2.19 billion Tethers were in circulation that same day. The article also states that the numbers for Tether’s fiat reserve and existing USDT coins “match up” for the months of September and October in 2017.
Although these numbers are simply a snapshot of Tether’s financial reserves, they could go a long way toward easing investor concerns over the stability of the USDT stablecoin and doing business with Tether and its sister exchange Bitfinex.
In January of this year, Tether issued an announcement claiming it had allowed accounting and advisory firm Friedman LLP to conduct a financial audit in hopes that it would “provide an interim analysis of [Tether’s] cash position and [its] issued and outstanding tokens.”
This audit, which had the potential to quell investor skepticism, only fueled the flames of controversy when it was canceled due to Tether’s concerns that the auditing firm wouldn’t be able to finish quickly.
In June of this year, Tether published a transparency report authored by Washington, DC-based law firm Freeh Sporkin & Sullivan LLP (FSS) in another perceived effort to increase transparency regarding its financial reserves. However, because FSS used neither generally accepted accounting principles nor generally accepted auditing standards, the report failed to put investors at ease.
To top it all off, also in June, researchers from the University of Texas published a paper that proposed entities at Bitfinex (which shares the same CEO and some of the same staff as Tether Ltd.) were using Tethers to buy bitcoin in an effort to manipulate the price of the latter.
The relationship between Tether and Bitfinex only increased investor concerns when in the first part of October the exchange was accused of insolvency and later forced to suspend deposits in fiat because of “processing complications.”
Tether has been adamant that it maintains adequate fiat reserves from the start. According to Bloomberg, when Tether opened its bank account with Noble Bank in September 2017, it had a balance of zero; by September 30, that balance had grown to $392 million. The article also states that during the same month Tether held $60.9 million “in customer cash at Bank of Montreal in an account under the name of Hoegner.” Based on Coinmarketcap.com data showing 435 million USDT in existence on September 30, Tether did have the fiat to back up its stablecoin at that point.
In November of this year, Tether announced it had switched its funds from Puerto Rico’s Noble Bank Ltd. to Deltec Bank & Trust Limited in the Bahamas and held a balance of $1.83 billion.
Tether was not available for comment by press time.
Nathan Graham is a full-time staff writer for ETHNews. He lives in Sparks, Nevada, with his wife, Beth, and dog, Kyia. Nathan has a passion for new technology, grant writing, and short stories. He spends his time rafting the American River, playing video games, and writing.
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