{"id":6015,"date":"2021-01-10T18:32:41","date_gmt":"2021-01-10T18:32:41","guid":{"rendered":"https:\/\/newmoneyreview.com\/?p=6015"},"modified":"2021-01-21T14:05:34","modified_gmt":"2021-01-21T14:05:34","slug":"tethers-backing-could-be-disclosed-later-this-year","status":"publish","type":"post","link":"https:\/\/newmoneyreview.com\/index.php\/2021\/01\/10\/tethers-backing-could-be-disclosed-later-this-year\/","title":{"rendered":"Tether\u2019s backing could be disclosed later this year"},"content":{"rendered":"<p>Tether insiders Paolo Ardoino and Stuart Hoegner said they may reveal full details of the reserves backing <a href=\"https:\/\/newmoneyreview.com\/index.php\/2020\/12\/15\/all-eyes-on-tether\/\">the controversial digital dollar<\/a> some time later this year.<\/p>\n<p>\u201cWe are contemplating providing an update on tether\u2019s asset backing during 2021,&#8221; said Hoegner, speaking on the <em><a href=\"https:\/\/www.whatbitcoindid.com\/podcast\/questions-for-tether\">What Bitcoin Did podcast<\/a><\/em>.<\/p>\n<p>Hoegner is general counsel for Tether and its affiliated entity, cryptocurrency exchange Bitfinex, while Ardoino is the chief technical officer for both.<\/p>\n<p>In April 2019, <a href=\"https:\/\/www.coindesk.com\/tether-lawyer-confirms-stablecoin-74-percent-backed-by-cash-and-equivalents\">Hoegner revealed on behalf of Tether<\/a> that tether tokens were only 74 percent backed by cash held in bank accounts, with the remainder of the backing made up of other assets, including an intracompany loan to Bitfinex.<\/p>\n<p>The disclosure came after the New York Attorney General <a href=\"https:\/\/newmoneyreview.com\/index.php\/2019\/04\/26\/ny-prosecutor-alleges-fraud-by-bitfinex\/\">filed a lawsuit against Tether<\/a>, alleging that Bitfinex and Tether had engaged in a series of conflicted corporate transactions and that <a href=\"https:\/\/newmoneyreview.com\/index.php\/2019\/08\/07\/untangling-tether\/\">in late 2018 Bitfinex had given itself access to up to $900m of Tether\u2019s cash reserves, without revealing this to investors<\/a> at the time.<\/p>\n<blockquote><p>the Bitfinex loan now makes up only 2.5 percent of tether\u2019s asset backing<\/p><\/blockquote>\n<p>During the What Bitcoin Did podcast, published today, Hoegner said that this intracompany loan had now been reduced to $550m due to the repayment of principal and interest ahead of time.<\/p>\n<p>As the total market value of tethers in issue has now risen to around $22bn, said Hoegner, the loan now makes up only 2.5 percent of the digital token\u2019s asset backing, compared to 26 percent of reserves in April 2019.<\/p>\n<p>Hoegner said that Tether\u2019s loan to Bitfinex is \u201cgood backing\u201d for the digital dollar tokens.<\/p>\n<p>During the podcast, Hoegner and Ardoino said that some of tether\u2019s reserves are in bitcoins, while declining to say how much.<\/p>\n<p>The two executives also didn\u2019t say how much of tether\u2019s backing is now represented by cash.<\/p>\n<p>The question of the asset backing of stablecoins\u2014digital tokens like tether that aim to trade one-for-one with fiat currencies like the US dollar\u2014has risen to prominence during the last two years.<\/p>\n<p>In November, the Bank for International Settlements said that stablecoin volumes <a href=\"https:\/\/newmoneyreview.com\/index.php\/2020\/11\/27\/central-banks-brace-for-stablecoin-explosion\/\">could grow &#8220;by orders of magnitude&#8221;<\/a> during the coming years.<\/p>\n<blockquote><p>\u201cWe have cooperated with the New York AG\u2019s office for over two years\u201d<\/p><\/blockquote>\n<p>Ardoino said during the podcast that Tether\u2019s primary bank is Bahamas-based Deltec Bank &amp; Trust. Asked by podcast host Peter McCormack whether Bitfinex or Tether were shareholders in the bank, Hoegner declined to answer.<\/p>\n<p>In December, the New York Attorney General published a letter saying that Tether and Bitfinex had been cooperating with its inquiry.<\/p>\n<p>The NYAG currently has an injunction in place, barring Tether from loaning Bitfinex any further funds, which is <a href=\"https:\/\/iapps.courts.state.ny.us\/nyscef\/ViewDocument?docIndex=2AsYgvjJAsSdalpfkInbHA==\">due to expire on January 15<\/a>.<\/p>\n<p>Tether and Bitfinex are due to submit a number of documents to the New York courts by that date for the injunction to be lifted. However, this deadline has previously been extended several times.<\/p>\n<p>\u201cBitfinex and Tether have cooperated with the New York AG\u2019s office for over two years,\u201d Hoegner said on the podcast.<\/p>\n<p>\u201cWe have produced approximately 2.5m pages of materials. While the AG\u2019s office originally obtained an injunction relating to Tether\u2019s reserves in April 2019, that injunction was substantially narrowed in the ensuing weeks and is not disruptive to the day-to-day business of either Bitfinex or Tether.\u201d<\/p>\n<blockquote><p>\u201cWe get bombarded on a daily basis with requests\u201d<\/p><\/blockquote>\n<p>During the podcast Ardoino said that demand for tether tokens is coming from a number of new sources.<\/p>\n<p>\u201cI believe it\u2019s time tether should outgrow the crypto market, which is still our main market,\u201d said Ardoino.<\/p>\n<p>\u201cWe are looking at working with businesses that offer remittances and businesses that want to optimise their payments solutions,\u201d said Ardoino. \u201cWe get bombarded on a daily basis with requests.\u201d<\/p>\n<p>Questioned about Tether\u2019s ability to screen token users and prevent bad actors from using the digital tokens, Hoegner said his client is now exceeding market best practices.<\/p>\n<p>\u201cTether has an outstanding compliance programme,\u201d said Hoegner.<\/p>\n<p>\u201cOur anti-money-laundering (AML) and countering the financing of terrorism (CTF) programmes are built to exceed or meet the standards of the US Bank Secrecy Act and applicable British Virgin Islands laws,\u201d he said.<\/p>\n<p><em><a href=\"http:\/\/eepurl.com\/du6eTr\">Sign up here<\/a> for the New Money Review newsletter<\/em><\/p>\n<p><em><a href=\"https:\/\/blubrry.com\/newmoneyreview\/\">Click here<\/a> for a full list of episodes of the New Money Review podcast: the future of money in 30 minutes<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tether insiders Paolo Ardoino and Stuart Hoegner said they may reveal full details of the reserves backing the controversial digital dollar some time later this year. \u201cWe are contemplating providing [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":6016,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1012,1053,1026,1014],"tags":[1930,1931,1420],"class_list":{"0":"post-6015","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-exchange","8":"category-featured-1","9":"category-latest-slider","10":"category-payment","11":"tag-ardoino","12":"tag-hoegner","13":"tag-tether"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.3 - 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