Tether Firebacks at Report by Bloomberg Journalist

Tether (USDT), the world’s most valuable stable coin, has denied the facts of a Bloomberg story about its reserves holdings.

Tether was one of the first cryptocurrencies to rely on a fiat currency to determine its market value. Tether, formerly known as “Realcoin,” was launched in July 2014 with each token valued at $1.00 to reduce the friction of moving actual money within the cryptocurrency ecosystem. Tether and other similar cryptocurrencies have been termed “stable coins” because of their dollar peg. Tether is the most valuable stable coin in terms of market capitalization, and users can exchange tethers for dollars. Tether was first released on Bitcoin’s Omni Layer, but it has since expanded to include Ethereum, Bitcoin Cash, TRON, EOS, and Liquid Network.

Bloomberg journalist Zeke Faux said in a Thursday story that Tether’s chief financial officer Giancarlo Devasini has utilized the company’s reserves to make investments, contradicting Tether’s public assertion that the holdings were fully supported at all times. Faux also claims that Tether has invested in Chinese companies and issued “billions of dollars” in crypto-backed loans. He was only able to confirm that one bank in the Bahamas was working directly with Tether, according to the report.

“Tether still hasn’t disclosed where it’s keeping its money,” said Faux. “If Devasini is taking enough risk to earn even a 1% return on Tether’s entire reserves, that would give him and his partners a $690 million annual profit. But if those loans fail, even a small percentage of them, one Tether would become worth less than $1.”

The article, according to Tether, is a “tired attempt” to discredit the firm using “innuendo and disinformation.” The stable coin issuer questioned Faux’s sources in an attempt to “discredit Giancarlo Devasini and Tether’s executives,” and insisted that its USDT coins are “completely supported,” citing quarterly assurance reports.

As part of a deal with the New York Attorney General’s Office in February, Tether and Bitfinex agreed to pay $18.5 million in penalties and produce thorough financial reports – the most current audit was filed with information disclosed as of June 30. Authorities stated that Tether lied about the amount of currency collateral backing its USDT coins.

Many are speculating whether China’s second-largest property developer, Evergrande Group, may default on $300 billion in obligations, according to the Bloomberg report. Tether denied having any debt from Evergrande, according to Faux, but would not disclose if it owned commercial paper from other Chinese companies.

Keeping in mind the current situation, a reporter of Bloomberg reported the failure in these loans can affect the price of the stable coin Tether which would hinder the market of Tether from advancement and might be alienated for the fact the stable coin would become less than $1. 

“If those loans fail, even a small percentage of them, one Tether would become worth less than $1,” said Bloomberg reporter Zeke Faux.