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According to the Financial Times, a certain undisclosed percentage of Tether’s reserves are held at a boutique bank in the Bahamas.
As Tether’s USDT reserves come under increasing scrutiny, individuals familiar with the matter told the Financial Times that an undisclosed percentage of Tether’s reserves are held at the boutique bank Capital Union in the Bahamas.
Tether has no liquidity issues
Tether is a privately held company that has issued a fiat-pegged stablecoin in the U.S., Mexico, Europe, and China. But so far, the company has refused to disclose its partners.
“Our counterparties are not public. We’re not a public company,” Tether’s senior chief executive told the Financial Times.
The USDT stablecoin, created in 2014, provides traders and investors with a convenient way to buy other cryptocurrencies without leaving the digital asset ecosystem. One USDT can be exchanged for one US dollar.
After Tether’s recent drop to $0.95 – the loss of the stablecoin peg to the US dollar – token holders were quick to convert their USDTs into fiat currency. And they managed to do it – Tether allowed investors to exchange tokens, which cost the company $ 10 billion, and, according to Chief Technology Officer Paolo Ardoino, this proves that the company has sufficient liquidity to maintain the stablecoin rate. At the time of writing, Tether has returned the peg to the US dollar and is worth exactly $ 1.
Tether Partners Revealed
So far, Tether has declined to comment on reports of its ties to Capital Union, with the bank saying: “The only information about our company that is allowed to be publicly available is in the annual report.”
Capital Union was founded nine years ago, and at the time of 2020 its assets amounted to $ 1 billion, but Tether confirmed a connection with another Bahamian bank – with Deltec, whose head told Bloomberg in 2021 that the bank owns only 25% of Tether reserves. Earlier in May 2022, Ardoino told the Financial Times that the company held cash deposits with two Bahamian institutions and had “strong relationships” with several banks around the world.
Last year, Capital Union hired a digital asset manager, and in April of this year began using crypto industry compliance software provided to the bank by analyst firm Chainalysis.
Also last year, the Commodities and Futures Trading Commission (CFTC) fined Tether $41 million for falsely claiming that the company holds cash reserves in banks to maintain the peg of its stablecoin. The company settled the issue with the CFTC without confirming or denying the allegations.
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