Stablecoins are digital currencies pegged to a sovereign currency such as the U.S. dollar. Tether is the largest among them with a market cap of $68B, at the time of writing. In fact, USDT has grown exceptionally over the past year or two. However, it hasn’t been around without its set of controversies.
In what is the latest one, Tether now finds itself in the crosshairs of an “alleged” Ponzi scheme speculation(s).
Bloomberg’s Businessweek, one of the world’s leading news publications, today released a series of tweets to shed light on the same. The same was based on an investigative report titled, ‘Anyone seen Tether’s Billions.’ The latter made a set of staggering allegations against the market’s most dominant stablecoin.
What are the accusations?
According to the same, Tether has invested some of its reserves in Chinese commercial paper. The report alleged that “they include billions of dollars of short-term loans to large Chinese companies.” This is interesting, especially since Tether has a business of billions of dollars in crypto-backed loans.
“Some of those loans have Bitcoin as collateral. One is to Celsius Network, a giant quasi-bank for cryptocurrency investors, according to its founder Alex Mashinsky.”
What’s more, according to John Betts, former CEO of Noble Bank International in Puerto Rico,
“Tether’s top executive put reserves at risk by investing them to earn potentially hundreds of millions of dollars of profit for himself.”
Jean Chalopin, Chairman of Deltec Bank & Trust in Nassau alleged something similar. He claimed that “he has held only cash and extremely low-risk bonds for Tether.
That isn’t all, however, with Businessweek revealing that Tether’s executives are subjects of a U.S Criminal investigation as well. Apparently, the FBI is looking into whether these execs used deceptive methods to open accounts years ago.
Learn more about our investigation here: https://t.co/x9DO6yYt2I
— Businessweek (@BW) October 7, 2021
The timing of the aforementioned report is interesting. Especially since just recently, SEC Chairman Gensler too criticized stablecoins. In fact, he called stablecoins ‘Poker Chips’ at the Wild West Crypto Casino.
“This article does nothing more than attempt to perpetuate a false and aging story arc about Tether based on innuendo and misinformation, shared by disgruntled individuals with no involvement with or direct knowledge of the business’s operations.”
“All Tether tokens are fully backed, as we have consistently demonstrated. The company has taken a leadership position in transparency, providing quarterly assurance attestations, confirming that all Tether tokens are fully backed. And these attestations and statements also confirm the vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.”