According to documents released by New York prosecutors, Tether Holdings Ltd., the company behind the world’s largest stablecoin, USDT, had listed securities issued by prominent Chinese banks and companies as part of its reserves.
The revelation, brought to light by New York’s Attorney General, dispelled long-standing speculation regarding Tether’s exposure to Chinese commercial paper.
In October 2021, Bloomberg conducted an investigation that unearthed evidence of Tether’s reserves containing billions of dollars in short-term loans to Chinese companies. The investigation also revealed a substantial loan provided to the crypto platform Celsius Network.
At the time, Tether denied involvement with the debt of the embattled China Evergrande Group but refrained from commenting on whether it held securities from other Chinese issuers.
The documents released by the New York Attorney General disclosed that Tether partially backed its stablecoin with securities from Chinese companies. Among the securities held were those issued by China Construction Bank Corp. and Agricultural Bank of China Ltd.
Tether’s Denial & Silence On Chinese Securities Controversy
The controversy surrounding Tether’s Chinese securities backing persisted for some time, with rumors circulating and speculation growing. The company, however, remained silent on the issue until September 2021, when it vehemently denied holding commercial paper from the troubled real estate giant Evergrande.
In July, Tether finally acknowledged that it did not possess any Chinese commercial paper at that time but refrained from admitting whether it had done so in the past. The company criticized the spread of misinformation in response to critics and maintained that it had never held commercial paper despite the doubts cast upon its holdings.
The documents revealing the company’s Chinese securities were released following a freedom of information request. They were part of the data the New York Attorney General collected during its investigation into Tether, which ultimately led to a settlement in 2021 and an $18.5 million fine imposed on the company.
Since then, the company has claimed to have removed all commercial paper from its reserves backing USDT. It has taken steps to address concerns and maintain the stability and credibility of its stablecoin.
With the disclosure of the company’s past inclusion of Chinese securities in its reserves, the company aims to move forward and reinforce trust in its operations, assuring investors of the security and transparency of its stablecoin.
Related Reading | Binance In The Crosshairs: French Authorities Investigate Alleged Money Laundering