Issued by Chinese state-owned ICBC, China Construction Bank and Agricultural Bank of China bonds served as collateral for Tether (USDT) in March 2021. This follows from the NYAG documents, Bloomberg reports.
The documents enumerate the separate instruments, but do not specify when the company owned them. The bonds matured in 2020 and 2021.
According to the documents, Tether also held bonds issued by Deutsche Bank, Barclays Bank, ArcelorMittal and other companies.
During the period, the issuer extended loans totaling $5.1 billion to at least 30 entities collateralised by Bitcoin, Ethereum and securities. The company used accounts at several Bahamian banks and Bitfinex to store Bitcoin in its reserves.
The agency reminded of its investigation in October 2021. Journalists at the time found that the reserves of the stablecoin included short-term loans to major Chinese institutions and loans to lending platforms such as Celsius Network.
Bloomberg sources at the time described Tether as an “offshore hedge fund with high risk”. They also pointed to a Берни Мейдоффа Ponzi scheme in the event of a crash of the stablecoin.
The issuer denied speculation that its reserves included Evergrande Group bonds, but declined to disclose instruments of other Chinese companies used as collateral.
Following litigation, Tether and Bitfinex agreed to pay $18.5 million to the NYAG. Under the terms of the settlement, the issuer was to provide quarterly reserve reports to the prosecutor for two years.
The agency gained access to documents on Tether’s reserve status as of 31 March 2021, with a detailed description of AML-procedures.
This became possible after the NYAG transmitted this information to CoinDesk. The issuer petitioned for trade-secret protection and an injunction on disclosing reserve data for USDT after the official joining of the publication to the case.
“Tether is in a completely different position than it was two years ago. The company has shown that its reserves are highly liquid, of high quality, and available to support redemptions of any size. The materials […] in the media give a limited view of what was relevant more than two years ago,” — заверил эмитент.
In June 2022, the organization denied rumors that 85% of its reserves were backed by Chinese commercial paper. Tether also emphasized that the liquidation of Celsius positions did not incur losses.
In July, the issuer pledged to wipe out the share of such instruments in the reserves, which at the time were valued at $3.7 billion. This happened four months later.
In August, WSJ journalists published two articles questioning the company’s financial stability.
Earlier, Tether’s market capitalization hit a new record at $83.4 billion.
As reported in May 2023, the firm’s CTO Paolo Ardoino said the company was exploring new lines of business owing to high profitability. Tether pledged to allocate up to 15% of profits to purchasing the primary cryptocurrency.
According to the Q1 2023 report, the issuer held Bitcoin worth $1.5 billion — about 1.8% of total reserves. In the same period, Tether reported net income of $1.48 billion.