Tether (USDT), the most valuable stablecoin by market capitalization, has refuted a Bloomberg storey on its reserves.
In fact, in a Thursday investigation, Bloomberg journalist Zeke Faux outlined a number of allegations against Tether. Including that its chief financial officer Giancarlo Devasini had used the company’s reserves to invest money. Contradicting Tether’s public stance that the holdings fully guaranteed at all times.
Furthermore, Faux claims that Tether has invested in Chinese companies. And made crypto-backed loans “worth billions of dollars”. However, he was only able to determine one bank in the Bahamas was dealing closely with Tether, according to the report.
Faux stated “Tether has yet to reveal where it keeps its money. “If Devasini is willing to take enough risk to earn even a 1% return on Tether’s total reserves, he and his partners would profit $690 million per year”. However, if even a small proportion of those loans fail, one Tether will be worth less than $1.” He added
Tether’s response was not long in coming
Tether described the report as a “tired attempt” to destabilize the company based on “insinuations and misleading information”.
The stablecoin issuer dismissed Faux’s sources as an attempt “to defame Giancarlo Devasini and Tether’s executives”. And maintained that its USDT tokens are “fully-backed”, citing semiannual guarantee reports.
As part of a settlement with the New York Attorney General’s Office in February, Tether and Bitfinex agreed to pay $18.5 million in damages to the state of New York and provide extensive financial reports. The most recent audit filed with information reported as of June 30. The authorities accused Tether of misrepresenting the extent to which its USDT tokens were backed by fiat collateral.
Tether has also faced accusations of owing money to other businesses
Many are speculating whether China’s second-largest property developer, Evergrande Group, may default on $300 billion in obligations, according to the Bloomberg report. Tether denied having any debt from Evergrande, according to Faux, but would not disclose if it owned commercial paper from other Chinese companies.