Over the last few years, Tether has involved in many scandals that made the USDT tokens become doubtful. Now on its website, the firm has just updated its reserves, which “may include other assets” than just fiat currency”.
A silent move
Based on a web archive on February 2019, Tether stated that “Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.”
However, now on the home page of Tether, that sentence has already been changed silently.
“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”). Every tether is also 1-to-1 pegged to the dollar, so 1 USD₮ is always valued by Tether at 1 USD.”
No one knows exactly the meaning of “other assets”, but it raises a concern whether Tether has the part in its USD crypto reserves. Some even wondered that “Tether admitted send funds to Bitfinex, which made USDT now officially not backed 100% by USD”,
How true are the Tether’s reserves?
This was not the first time when the USDT were in question. Back in June 2018, The CFO and General Counsel of Tether certified its “backed 100% by fiat” by a sworn statement after the firm Freeh Sporkin & Sullivan, LLP (FSS) claimed this on a published report containing many caveats.
In September 2017, the firm Friedman LLP, hired by Tether for security auditing, sent out a report confirming that all USDT in circulation was fully backed by fiat, but it also revealed many concerns like FSS. Since the contract between Friedman and Tether ended in January 2018, this firm never had the chance to carry out a full security audit on the reserves.
In last November, Tether announced a formed banking relationship with Deltec Bank& Trust Limited. Moreover, this firm further published a letter from Deltec Bank showing “due diligence review of our company”, which confirmed that the firm is holding $1.83 billion at the bank. By that time, Tether’s reserves also matched match the amount of USDT in circulation, but then it caused speculation due to the reliability of the letter.