Stablecoin Tether Says It Has $1.8 Billion in Bahamian Bank But Red Flags Still There
Tether, the company behind the stablecoin USDT, stated its banking relationship with Deltec Bank in the Bahamas and published a letter from the said bank confirming its USD reserves with $1.8 billion in the bank account.
Questioned for its opaque operations, the firm publicly announced on Thursday, that it has formed a banking partnership with Deltec Bank, a 72-year-old financial institution located in Nassau, stating that the Bahamas-based financial institution has conducted its due diligence process throughout a period of several months, and identified the results as positive and allowed the company to create a bank account. Deltec’s review included an analysis of the company’s compliance processes, policies and procedures, a full background check of the shareholders as well as ultimate beneficiaries and officers of the firm, and assessments of Tether’s treasury management policies and the ability to maintain the USD-peg at any moment.
The claim soon causes a quite stir in the crypto community as the state of Tether’s reserve has long been a subject of controversy. Upon the news, the Chinese community had the same mixed reactions as their peers abroad.
Some said the news reassured them,
“Will hodl it well”;
“Bitfinex is much more trustworthy than others”;
“USDT is much more reliable than 99% of stablecoins in the market”.
While some held the same doubt as reddit users claimed – “Tether Limited could’ve taken out a loan to get this money, rather than raising it by USDT issuance, and this letter would never tell us about that”; “cannot help but laugh when read ‘Dir Sirs'”; “what a signature”
“Raise the money for several days, huh?”
“Another bank will be close to insolvency since Tether published their relationship.” (implicating that pressure on the controversial stablecoin may place the bank in financial peril like its last partner bank Noble Bank)
This is not the first time that the company attempts to settle the controversy by publishing balance in their bank account, still, much-needed details on the sources of funds or financial statement remain hidden this time. For investors who have been haunted by its peg lost since the great price drop (~10% simply in hours) on October 15, the red flags are still there.
Crypto analyst Joseph Young tweeted that Tether is like that kid in school that always forgets the last page of math homework.
While a man replied “more like that kid who has the right answers, but doesn’t show their work”.
As of press time, a USDT values $0.98, coming close to its dollar peg. Will the news pump market faith in the stablecoin? Leave your comment below.