Troubled stablecoin operator Tether has announced a new banking relationship, in a move designed to reassure the cryptocurrency community. This is after a torrid October saw the coin report double digit losses amid continued rumors of insolvency. In a statement posted November 1, the USDT owner announced a relationship with Bahamas-based bank Deltec, which was finalized after a period of due diligence carried out “over a period of several months”.
Yesterday’s announcement comes off the back of June’s “transparency update”, where law firm FSS performed a “randomized inspection” of Tether’s bank account and concluded that Tether had the funds to back each USDT in circulation.
Deltec Keeps Their Distance
Deltec themselves released a letter confirming the presence of over $1.83 billion Tether funds in their portfolio, but questions quickly arose about the letter’s contents. The assurance was provided “without any liability” by the bank and is “solely based on the information currently in our possession”, which some have said renders it no better than an ATM receipt. The letter is also signed with a barely legible curved scrawl and cannot be identified by the named signatory as there isn’t one, just the name of the bank, raising questions as to why no one at Deltec was willing to put their name to the document.
Interestingly, the announcement of the Deltec relationship comes just a week after Tether completed a $500 million token burn, reducing the circulating supply to that stated by Deltec and leaving it $700,000 under the $2.5 billion reported by FSS in June. With other cryptocurrencies this may not cause much of a stir, but with rumors constantly abounding that each USDT is backed by a dollar, reducing the amount by this much in one go will only raise more eyebrows. At the same time the Bitcoin cold wallet of exchange Bitfinex has dropped by around 100,000, causing some to speculate that it has been sold to try and get USDT back to $1.
Many within the cryptocurrency sphere agree that a legitimate Tether audit would put all the rumors about their backing to bed one way or another, but this seems to be proving very difficult for Tether to achieve. These unconvincing announcements however do more harm than good for their reputation, only heightening speculation and concerning investors further about their solvency.