Bloomberg reported December 18 that Tether, the largest stablecoin by market cap, is most likely backed by equivalent USD deposits.

Tether’s Bank Statements Suggest USD Sufficiency

According to the report, Bloomberg reviewed the bank statements of four separate months which depicted that the amount of USDT coins in circulation was in accordance with Tether LTD’s bank account deposits.

In particular, a statement from January 31, 2018, showed that the company held $2.2 billion in an account at Noble Bank Ltd. in Puerto Rico.

During the same period, 2.195 (~2.2 billion) USDTs existed, based on data extracted by Coinmarketcap.com.

Similarly, the results from figures examined during September and October 2017, respectively, showed a proportional balance between the USDT supply and collaterals in USD.

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While the research was not based on Tether’s complete auditing data, the information provided by Tether Limited is the most detailed up to date.

Tether Under the Spotlight of Authorities

Tether Limited has been surrounded by controversy as it has repeatedly failed to provide transparent auditing data and has been operating in opacity.

Tether is being used for 30% of all Bitcoin transactions across cryptocurrency exchanges, Blockspur estimates.

It has previously been accused of being used to manipulate the price of Bitcoin through Bitfinex, a cryptocurrency exchange also owned by the executives of Tether Limited.

The claims about the uncertainty around Tether were further extended when the CFTC (Commodity Futures Trading Commission) issued subpoenas to both companies in respect to the collateralized reserves in USD and the dubious connection between them.

Furthermore, the existence of adequate USD deposits by Tether has been extensively questioned by the crypto community before, as Bitfinex offers on-margin trading.

As from early 2017, only Bitfinex was allowed to acquire Tether coins from the issuer and investors could only trade USDT through Bitfinex exclusively.

Noble’s bank statements confirm that each time Bitfinex sent digital coins to Tether Ltd., an equivalent amount in US dollars was then released towards Bitfinex.

The issuance and movement of every Tether coin are recorded on the Omni layer of Bitcoin’s blockchain.

Therefore, this created an auditing trail that Noble bank used to verify the money movements between Tether Limited and Bitfinex.

These blockchain transactions were also scrutinized by the CFTC for six months, during the investigation that followed after the issuance of subpoenas to Bitfinex and Tether.

“On July 6, Bitfinex sent 100 million digital coins to Tether Ltd., according to the blockchain. The same day, Tether paid Bitfinex $100 million, a Noble bank statement shows. On July 20, $50 million was exchanged for 50 million Tethers. On July 24, it was $100 million for 100 million coins.”

Bloomberg to Play the Role of an Auditor?

Without disclosing more details, Bloomberg said that the aforementioned statements were provided by a person with access to the company’s records, while their veracity was confirmed by a governmental official.

It also underlines that “the bank statements reviewed by Bloomberg don’t show, for example, where the funds originated or where they are now.”

The news coming from Bloomberg’s report is surely positive for Tether Limited, but as the data examined are not officially audited by an accredited firm, conclusions may not be as safe.

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