Tether Refutes Allegations Backed By Chinese Companies In 2021

Key Points:

• Tether denied reports that up to 85% of its commercial paper portfolio is backed by short-term debt financed by China.
• The media, including Coinbase, mentioned the NYAG, asking to publish their first quarterly report under FOIL, but Tether objected.

Documents obtained as part of the New York Attorney General’s investigation against Tether corroborated reports that it had assets issued by Chinese entities to back up its USDT reserves.

Long-held concerns that Tether’s USDT stablecoin was backed by Chinese securities were proven in papers discovered as part of the attorney general’s probe against Tether in 2021. According to a Bloomberg investigation in October 2021, Tether had billions in short-term loans to Chinese enterprises.

The stablecoin issuer apparently canceled up to 29 accounts held by prominent crypto players two years ago, according to facts in papers disclosed by the New York Attorney General (NYAG). The majority of the people on the list seem to have had their accounts canceled for various reasons.

Tether answered that it does not wish to comment on any specific connection, however, everyone did pass the stringent compliance checks at onboarding and continuous monitoring required by Tether’s compliance regulations.

Several of these accounts belonged to companies such as MoonPay, the controversial crypto lending service BlockFi, CMS Holdings, and the now-defunct crypto hedge fund Galois Capital.

The NYAG’s inquiry was supposed to complete in February 2021, but it was revealed that some of the records were dated as late as June of that year. Their usernames and passwords have already been redacted. After a freedom of information request submitted by CoinDesk, these records were received from New York’s attorney general.

Tether denied reports that up to 85% of its commercial paper portfolio was backed by short-term debt issued by China or Asian corporations in July of last year. According to the most recent filings, Tether does depend on certain Chinese instruments to underpin USDT, including notes issued by the Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., and Agricultural Bank of China Ltd.

Tether had assets issued by other foreign corporations, including Deutsche Bank and Barclays Bank, to maintain its reserves, according to the papers.

The investigation against Tether and its sibling company Bitfinex for the misuse of $850 million money was conducted by the Office of the New York Attorney General. At this period, iFinex, the parent firm of both companies, sought a 30-day extension to submit the required financial records to NYAG before the originally planned deadline.

In the end, the parties struck a $18.5 million settlement as a penalty, as well as a suspension of trading activity in New York.

After that, media outlets, including Coinbase, addressed NYAG, asking for public publication of their first quarterly report under the Freedom of Information Law (FOIL), but Tether objected. Tether said that it was attempting to safeguard its clients’ personal data from malicious actors.

But, along the way, NYAG granted media outlets access to the papers in order to demonstrate its dedication to transparency and openness, and the cancellation of numerous cryptocurrency companies’ accounts seems to be one of the issues that have been revealed so far.

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Harold

Coincu News