Tether Dusts Its Hands Off The Sinking Ship Silvergate

Source: Unsplash

Tether’s CTO has stated that his organization has no exposure to Silvergate, as businesses in the cryptocurrency sector unite to remove themselves from the embattled bank.

A U.S. bank called Silvergate serves the crypto business, which has previously had difficulty getting banking services but has recently been shaken by financial difficulties.

The San Francisco bank disclosed a $1 billion net loss last month in addition to a $14 billion fall in customer deposits during the final quarter of 2022.

It postponed yesterday’s submission of its yearly 10-K report to the Securities and Exchange Commission of the United States because it required “extra time” to allow an outside accounting firm to finish some audit procedures.

Today, the company’s stock is rapidly falling, and cryptocurrency businesses are cutting relations with it. The biggest cryptocurrency exchange in America, Coinbase, said earlier today that it was stopping transfers to and from banks. Paolo Ardoino, CTO of Tether, stated on Twitter on Thursday, that Tether had no exposure to SIlvergate.

Tether In Troubled Waters?

Despite the terrible bear market currently affecting the cryptocurrency sector, Tether, the business behind the biggest stablecoin and most traded cryptocurrency, appears to be doing well.

It announced this month that despite handling $21 billion in redemptions the year before, it still made $700 million in earnings in Q4 2022.

With a $71 billion market cap, its stablecoin, USDT, is the third-largest cryptocurrency after Bitcoin and Ethereum.

Moreover, it is the digital asset that is traded the most: according to CoinGecko, its 24-hour trading volume is above $34 billion.

This is so that traders may swiftly make and exit deals without having to deal with U.S. dollars, Japanese yen, or other fiat currencies in a traditional bank because USDT is tied one-to-one with fiat currencies.

However, Tether as a firm is contentious because it has so far declined to provide evidence that its stablecoin is backed by dollars and also because the company is not independently audited.

During a two-year investigation by the New York Attorney General, it was claimed that Tether “made false statements about the backing” of its stablecoin. The company in 2021 agreed to stop operating in New York.