In the letter
- Yesterday, Tether released a certificate of its reserves.
- It is an attempt to show that all of his stablecoins are fully secured.
- It’s knottier than it seems.
Yesterday, Stablecoin Issuer Tether published one Certificate in terms of its reserves – the amount of assets that “support” each coin.
It is the first such certificate from rope in years, and it hasn’t exactly calmed the skeptics.
According to the document, which consists of Tether’s own report plus a statement from a small Cayman Islands accounting firm called Moore Cayman, Tether had approximately $ 35.3 billion in assets and $ 35.3 billion in liabilities as of Feb.28. $ 2 billion. These liabilities relate to $ 35.1 billion[d] to issued digital tokens ”, that is, they supported the Tethers floating around at that time.
It is a gesture towards transparency from a company that has in the past been subjected to an intensive test of its evasiveness. The New York attorney general’s office recently completed its longstanding investigation into Tether’s operations and fined the company $ 18.5 million comparison.
The new document is not nothing, but it does not mean that there are no unanswered questions.
February 28th only?
According to the certificate, Tether had $ 35.3 billion as of Feb. 28, which helped the $ 35 billion in circulation in Tether at the time. But what about before the 28th?
As part of Tether’s investigation, the New York AG office found that an earlier “transparency update” regarding Tether’s reserves was “misleading”. The note included a bank statement, but did not disclose that much of the funds had been deposited into the bank that morning. Before that date, it is unclear how much money Tether actually had, according to the Attorney General.
Since the certificate only concerns a single moment, we have no way of knowing whether this is the case here. A full audit (beyond a certificate) could provide a more complete picture of Tether’s holdings and examine activities over time. (Tether has yet to respond to a request for comment from Decrypt.)
What are “assets” anyway?
Moore Cayman’s note states that Tether’s “consolidated total assets”[ed] on February 28 to at least USD 35,276,327,156 “. However, it is also clarified that “the Group’s reserves for its issued digital assets are in excess of[ed] the amount required to redeem the issued tokens for digital assets. “
It begs an important question: if some of that $ 35 billion is invested in “digital assets,” how are those assets valued? Cryptocurrencies are notoriously volatile, and a decline in the market would certainly have an impact on the digital assets held by Tether.
So if the market value of the digital assets decreased significantly after purchase, the value of the stake would be affected. For example, in December, Microstrategy reported that it had hurt the value of its BTC holdings by $ 70.7 million. It only started buying BTC in August lol
– (((Frances ‘Not A Monster’ Coppola)) 🌷🌷🌷 (@Frances_Coppola) March 31, 2021
“It’s unclear what kind of fortune it is,” said Rohan Gray, a law professor at Willamette University Decrypt. “It does not explain whether these are deposited with a licensed bank, whether they are US Treasuries, whether they are liquid according to the respective liquidity standard. So it is one thing to say that you have assets; it is another thing to say that you have cash or other safe cash. “
“For all we know,” said Gray, “you could have $ 25 in your bank account and the rest could be in Bitcoin.”
What about future reports?
As part of the settlement with New Yorker AG, Tether must submit quarterly reports on its holdings. In these reports, Tether must “publish the categories of assets that Tether supports (e.g. Cash, loans, securities, etc.) indicating the percentages for each of these categories. ”
Yesterday’s certificate does not contain anything like that. However, these quarterly reports filed with the AG could provide more insight into how exactly the money is being invested by Tether.
Since February, Tether has issued new coins valued at $ 6 billion. The new fillings must also take this into account.
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