Tether Limited responds to Bloomberg’s accusations

Tether Limited released a statement responding to Bloomberg for the recent article accusing its executives of bank fraud. Meanwhile, the USDT market is holding steady.

The company responsible for issuing USDT, Tether Limitedposted a release this Monday to respond to a Bloomberg article released in the morning hours, where company executives are accused of committing bank fraud and are facing an investigation by the United States Department of Justice (DOJ).

According quoted Bloomberg, the DOJ is conducting a federal investigation that could result in legal and criminal charges against several executives of Tether Limited, for concealing transactions related to the cryptocurrencies in his first years of life.

However, Tether Limited assures that Bloomberg’s accusations are false and that the medium only wants to attract attention with “outdated claims”, which only seek to damage the company’s image within the industry. In its statement, Tether Limited explains that Bloomberg bases its accusations on anonymous sources while the company has taken care to always maintain “an open dialogue with law enforcement agencies, including the Department of Justice.”

Tether Limited’s statements seek to calm the storm of speculation that Bloomberg unleashed with its publication.

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Tether and regulators

Unfortunately, Tether Limited’s relationship with financial regulators has not been the most favorable. In 2018, Bloomberg reported that the DOJ was investigating the company for allegedly manipulating the Bitcoin market.

USDT is the stablecoin The most popular in the cryptocurrency industry and the most traded of the markets, but also the most controversial due to concerns about its actual cash reserves. It should be clarified that USDT came onto the market in 2014 and since then it has maintained simply impressive growth, which is why many question whether the company really has reserves of money to support its enormous capitalization, which exceeds $61.79 billion at the time of this edition.

USDT is banned in New York

Also, earlier this year, the New York Attorney General’s Office issued an order against Tether Limited and prohibited the use and trading of USDT within the state of New York, citing market manipulation by Tether and fraudulent and fraudulent reporting. inflated about the stores of value backing the issuance of USDT.

The New York State Attorney’s Office had been investigating Tether since 2019 and in February of this year concluded that the company engaged in illegal activities, hiding vital information about the true cash reserves of USDT and misrepresenting its actual balances. Likewise, the Prosecutor’s Office pointed out that Tether Limited had been hiding millionaire losses from the state.

The case culminated in a fine of 18.5 million dollars to Tether and the Prosecutor’s Office maintains the ban on the circulation of USDT in New York.

Less than 4% of cash reserves

Following the order issued by the New York Attorney General’s Office, Tether Limited was forced to file regular reports on its cash reserves supporting the issuance of USDT.

Thus, in May the company public an audit carried out by the Moore Cayman firm in which it details that only 3.87% of its USDT issuance is backed by cash in banks. Much of the stablecoin’s capitalization and circulation, over 65%, is backed only by commercial paper.

Breakdown of USDT reserves 2021.
Source: Tether Limited

Increased regulatory scrutiny

Bloomberg’s accusations coincide with a stricter regulatory environment by US regulators, who are conducting increased scrutiny within the crypto market, especially in the sector of stablecoins like USDT, which have grown in popularity and capitalization.

Last week, US Treasury Secretary Janet Yellen urged regulators to speed up a regulatory framework applicable to stablecoins. In addition to the United States, China’s financial regulators are also turning to the USDT market, announcing the soon arrival of new regulatory measures that help minimize the risks that this digital currency may cause within the financial system.

The USDT market has been flat against the US dollar following the Bloomberg release.

Continue reading: China Eyes Tether and Announces “Some Measures” Against Stablecoin Risks