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Since the crypto market began to fall in early May, the billion-cap Tether stablecoin, which functions as the largest bank in the cryptocurrency economy, has carried out a $10 billion buyback.
This means that the company effectively copes with the withdrawal of funds that occur due to the fact that investors seek to exchange their tokens for fiat currencies.
As follows from the public blockchain, on the night from Saturday to Sunday, Tether users withdrew a stablecoin worth $ 1 billion, in the process of which the cryptocurrency was returned to the company and destroyed.
Three days earlier, another $1.5 billion was similarly repaid, and the total withdrawal amount, taking into account minor fluctuations in the stablecoin peg, now stands at about one-eighth of the company’s total reserves.
The latest repayment came after Tether published audited financial statements that show that as of the end of March, the company provided user deposits with a mix of US Treasury bills, bonds of private companies and a host of other investments worth about $ 5 billion, including in various cryptocurrency organizations.
At first, Tether claimed that the stablecoin’s reserves were backed by ONE-to-one U.S. dollars. However, after an investigation conducted by the Attorney General of New York, the company admitted that this ratio is not always maintained.
The latest report proves that Tether holds about $20 billion of its cash in commercial paper, $7 billion in money market funds, and nearly $40 billion in U.S. Treasury bills, all of which are a safe investment. Another $7 billion is held in “corporate bonds, funds and precious metals” and “other investments (including digital tokens).”
This is a small part of Tether’s reserves, but it puts the company at risk, due to which the organization will not be able to keep the promise of full collateral in case of significant market fluctuations.
That may have already happened, according to financial technology columnist Patrick McKenzie, who works for payments company Stripe. According to the expert, this was due to the fact that Tether made investments in digital tokens of the cryptocurrency investment platform Celsius.
Tether has invested $62.8 million in reserves in the Celsius network… Celsius is in free fall due to the current situation in the market, as a result of which the value of their token has decreased by more than 86%, “said Mackenzie.
Clearly, these investments have depreciated by more than $20 million, and the impairment of 1% of a single item on their balance sheet has eaten up more than 10% of their capital.
Meanwhile, the technical director of Tether Paolo Ardoino tirelessly repeats about the full provision of cryptocurrency with various kinds of assets.
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