Tether CEO Deletes Twitter Account as the Firm Comes Under More Scrutiny
Stablecoin issuer Tether is dealing with rising scrutiny from regulatory authorities as they attempt to understand its cash reserves, business framework, and more.
Speculations on Tether
Tether has released 48 billion USDT — claimed to be valued at $1 each — this year. However, it continues to be vague if the firm has sufficient financial backing to support that issuance. Also, how they’d take care of it if all the stablecoin owners decided to cash in their financial investments at the very same time.
There’s extensive speculation that Tether may be holding documents from China firms. It would describe why Wall St has no idea about Tether. However, it makes Tether very risky as China appears to be going into a financial dilemma.
Tether’s legal action unravelled over the last couple of months; however, just a couple of hours back, the CEO of Tether had erased his Twitter account.
More Trouble Looms
In a Thursday report, Bloomberg reporter Zeke Faux made various assertions against Tether. They included that its chief economic officer Giancarlo Devasini has been using the company’s reserves. He has allegedly built investments. This move appears to contradict Tether’s public position that the holdings were backed entirely at all times.
Faux claims that Tether still hasn’t revealed where it is maintaining its money.
“If Devasini is taking sufficient risk to gain even a 1% return on Tether’s whole reserves, that would provide him and his partners a $690 million yearly profit. However, if those loans fail, also a tiny portion of them, one Tether would become worth much less than $1.”
Just yesterday, US Deputy Attorney General Lisa Monaco revealed the development of a task force headed by the DOJ. It is cracking down on crypto entities, including exchanges, manipulators, and so on.
Tether Dismissed the Claim
Tether called the report a “tired attempt” to threaten the firm based upon innuendo and misinformation. The stablecoin issuer tested the credibility of Faux’s sources to discredit Giancarlo Devasini and Tether’s executives. He continued to assert its USDT tokens are completely backed, pointing out its quarterly assurance records.
In February, Tether and Bitfinex consented to pay New York state $18.5 million in damages and provide extensive reports on its funds. It was part of a settlement with the New York Attorney General’s Office — Tether filed the most recent audit with details reported since June 30. Authorities had claimed Tether misrepresented the degree to which its USDT tokens were backed by fiat collateral.
The Bloomberg report comes as many speculate whether China’s second-largest property developer, Evergrande Group, will default on $300 billion in financial debts. According to Faux, Tether refuted holding any financial obligation from Evergrande. However, they would not validate whether it had commercial paper from various other Chinese companies.
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