Tether Limited, the issuer of the Tether (USDT) stablecoin is in self-inflicted damage control mode. The firm announced on Nov. 1st that it was partnering with Deltec Bank & Trust Limited, confirming the rumors that have been going on for a while. Tether has been under fire since reports emerged that Tether Limited does not have enough USD reserves to back up each token in circulation. The firm made things worse by severing ties with its external auditor, fueling more speculation that the stablecoin could be a scam.
Tether Controversial Stunts and Damage Control
Tether is on a mission to clear its name after several bouts of controversies. Tether confirmed the partnership with the 72-year old Bahamas-based financial institution claiming that the bank had done its due diligence before signing the deal.
The blog post claims that Deltec’s due diligence included:
“An analysis of our compliance processes, policies and procedures; a full background check of the shareholders, ultimate beneficiaries, and officers of our company; and assessments of our ability to maintain the USD-peg at any moment and our treasury management policies.”
The statement further read that the due diligence lasted several months and “led to the opening of our bank account with this institution.” Tether Limited will be audited by the bank on an on-going basis.
The bank wrote a letter to Tether Limited on Nov. 1st stating that:
“The portfolio cash value of your account with our bank was US$1,831,322,828.”
The alleged figure in the bank account means that Tether has sufficient funds to back its tokens. The Tether stablecoin has a market cap of just over $1.75 billion.
The company further claims that it “is registered with the Financial Crimes Enforcement Network of the US Department of the Treasury” and complies with financial laws.
Tether has burned around 990 million tokens in separate chunks since the beginning of October. Tether has been accused of “working” with Bitfinex cryptocurrency exchange to manipulate the market. The situation is worsened by the fact that the two companies share the same CEO and CFO.
Mike Novogratz, a billionaire, and Bitcoin bull came out guns blazing, saying that the company can only blame itself. Speaking at a conference in German, he remarked:
“I think Tether didn’t do a great job in terms of creating transparency.”
According to a recently published big data analytics report by Houbi Global, Tether was one of the most researched keywords in the crypto space. However, it is only because crypto players were looking for an alternative.
The stablecoin is supposed to be “tethered” to the USD, but at some point, its price fell to around $0.88, triggering a massive sell-off. In ninth place, the stablecoin is currently trading at $0.9898, according to data provided by CoinMarketCap.