{"id":50847,"date":"2021-10-07T19:43:11","date_gmt":"2021-10-07T16:43:11","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=50847"},"modified":"2025-09-02T20:31:05","modified_gmt":"2025-09-02T17:31:05","slug":"bloomberg-finds-chinese-commercial-paper-in-tethers-reserves","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/bloomberg-finds-chinese-commercial-paper-in-tethers-reserves\/","title":{"rendered":"Bloomberg finds Chinese commercial paper in Tether\u2019s reserves"},"content":{"rendered":"<p>The backing of the Tether (USDT) stablecoin includes short-term loans to major Chinese companies and loans to crypto-lending platforms such as Celsius Network, according to a Bloomberg investigation.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">A Bloomberg investigation finds Tether holds some of its reserves in billions of dollars worth of Chinese commercial paper. <a href=\"https:\/\/t.co\/LgQYs1Kj8V\">https:\/\/t.co\/LgQYs1Kj8V<\/a> by <a href=\"https:\/\/twitter.com\/ZekeFaux?ref_src=twsrc%5Etfw\">@ZekeFaux<\/a> <a href=\"https:\/\/t.co\/j1I6WNptK9\">pic.twitter.com\/j1I6WNptK9<\/a><\/p>\n<p>\u2014 Tracy Alloway (@tracyalloway) <a href=\"https:\/\/twitter.com\/tracyalloway\/status\/1446055606935175171?ref_src=twsrc%5Etfw\">October 7, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The report recalled long-standing industry concerns about USDT&#8217;s backing.<\/p>\n<p>The growth of the stablecoin&#8217;s supply to $69 billion USDT, including $49 billion <meta charset=\"utf-8\">USDT this year, could place its issuer among the 50 largest banks in the United States, were it not an unregulated offshore company.<\/p>\n<p>The growing scale and lack of transparency of the stablecoin&#8217;s reserves drew <a href=\"https:\/\/forklog.com\/en\/news\/us-treasury-secretary-janet-yellen-urges-swift-stablecoin-regulation\">the attention of US financial authorities<\/a> and intensified criticism of the organisation.<\/p>\n<p>In January, a <a href=\"https:\/\/crypto-anonymous-2021.medium.com\/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3\">Medium article<\/a> appeared. Its author pointed to a &#8216;significant&#8217; discrepancy between the amount of Tether issued since the start of last year and the funds held at Deltec Bank.<\/p>\n<p>According to Bloomberg, the company does not store all of its assets with a Bahamas-based bank. Its chairman, Jean Chalopin, said that it held only cash and bonds with very low risk. Recently, only about $15 billion remained with Deltec, with the remainder Tether had begun to place with other lending institutions, he said.<\/p>\n<p>In September, CNBC&#8217;s Mad Money host Jim Cramer <a href=\"https:\/\/www.cnbc.com\/2021\/09\/20\/cramer-says-take-crypto-profits-cites-evergrande-related-tether-risks.html\">warned of the risks of a collapse of the entire crypto-economy<\/a> if Tether Limited were to fail. He cited the possible inclusion of Chinese company commercial paper in its reserves, including the <a href=\"https:\/\/forklog.com\/en\/news\/possible-default-by-a-chinese-developer-rattled-markets-weighing-on-bitcoin\">default by Evergrande<\/a>. The issuer of USDT <a href=\"https:\/\/www.reuters.com\/business\/finance\/stablecoin-tether-says-holds-no-evergrande-commercial-paper-2021-09-16\/\">denied<\/a>.<\/p>\n<p>The growing scale and lack of transparency of the stablecoin&#8217;s reserves drew <a href=\"https:\/\/forklog.com\/en\/news\/us-treasury-secretary-janet-yellen-urges-swift-stablecoin-regulation\">the attention of US financial authorities<\/a> and intensified criticism of the organisation.<\/p>\n<p>The spokesman for the company described such comments from one of its former partners, with whom the firm is still in litigation, as worthy of no attention.<\/p>\n<p>Andr\u00e9 Hogner, representing the issuer, replied that the criticisms were misinformation and noted that there are no clients denied the right to convert to fiat.<\/p>\n<p>In July, it emerged that the US Department of Justice <a href=\"https:\/\/forklog.com\/en\/news\/bloomberg-reports-us-justice-department-has-opened-an-inquiry-into-tether-the-company-calls-the-news-clickbait\">investigation into possible banking fraud by Tether Limited executives<\/a> had been initiated. Bloomberg reports that authorities were interested in the early stages of the firm&#8217;s activities.<\/p>\n<p>In February 2021, the stablecoin issuer and its related crypto exchange Bitfinex <a href=\"https:\/\/forklog.com\/en\/news\/bitfinex-and-tether-to-pay-new-york-state-18-5-million-in-settlement-over-financial-operations\">resolved the conflict<\/a> with the New York Attorney General&#8217;s office over the $850 million loss. Attorney General Letitia James called Tether&#8217;s claim that its digital asset was fully backed by US dollars a lie. But the company said the outcome validated its operations.<\/p>\n<p>Bloomberg obtained a detailed reserve report for USDT. It showed allocations include short-term lending to Chinese corporates, contradicting the policy of money market funds. That occurred before the Evergrande saga.<\/p>\n<p>Journalists also learned of Bitcoin-collateralised loans on crypto-lending platforms such as Celsius Network. According to Celsius founder Alex Mashinsky, he paid 5\u20136% annual interest on the $1 billion raised.<\/p>\n<p>At the time, Hogner <a href=\"https:\/\/www.reuters.com\/business\/finance\/stablecoin-tether-says-holds-no-evergrande-commercial-paper-2021-09-16\/\">claimed<\/a> that Tether was fully backed, and that issuers of commercial papers in its reserves carried an A-2 rating or higher.<\/p>\n<p>Bloomberg drew <a href=\"https:\/\/forklog.com\/en\/news\/study-stablecoins-would-bring-the-united-states-back-to-the-19th-century-wildcat-banking-era\">parallels with the era of &#8216;wild banking&#8217; in the 19th century<\/a>. The journalists noted the risk of losing the 1:1 peg of USDT to the dollar if some loans were not repaid. Losses could exceed the profits from such investments and trigger a run on deposits, they concluded.<\/p>\n<p>In response, Tether Limited <a href=\"https:\/\/tether.to\/tether-responds-to-bloomberg-businessweek-article\/\">called<\/a> the Bloomberg article a compilation of old unverified conjectures aimed at discrediting a market leader, \u201cwhose track record of innovation, liquidity and success speaks for itself\u201d.<\/p>\n<p>The issuer characterised such comments from a former partner, with whom the firm is still in litigation, as unworthy of notice.<\/p>\n<div class=\"wp-block-text-wrappers-update-2 article_update\"><time class=\"gtb_text-wrappers_update_time\">8 \u043e\u043a\u0442\u044f\u0431\u0440\u044f 2021 | 12:17<\/time><span class=\"gtb_text-wrappers_update_head\">Update: <\/span><\/p>\n<p>The Twitter account attributed to Tether&#8217;s CEO Jean\u2011Louis van der Velde has been deleted. According to <a href=\"https:\/\/archive.is\/oGsRw\">an archived copy of the page<\/a>, in the last tweet the account owner commented on the Bloomberg article:<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u00abAnother financially compromised, dying magazine, trying to conjure up some Tether-related FUD to earn a few dollars and delay its demise for a few more days\u00bb.<\/p>\n<\/blockquote>\n<\/div>\n<p>As reported in August, the parent company of the Bitcoin exchange Bitfinex and the stablecoin issuer Tether \u2014 iFinex \u2014 <a href=\"https:\/\/forklog.com\/en\/news\/tether-issuer-seeks-court-injunction-to-bar-disclosure-of-usdt-reserve-data\">appealed<\/a> to the New York Supreme Court to bar media and others from demanding data on the state and structure of USDT reserves over the last several years.<\/p>\n<p>Earlier, the audit firm Moore Cayman published a report indicating that, as of 30 July 2021, USDT was 100% backed by reserves of Tether Holdings Limited.\u00a0<\/p>\n<p>Moreover, 49% of the reserves consisted of commercial securities worth $30.8 billion. The share of cash and bank deposits which could be withdrawn within two days or less accounted for 10% \u2014 about $6.28 billion.<\/p>\n<p>A significant portion of the reserves comprises U.S. Treasuries with maturities of less than 90 days. They accounted for more than 22.5% of total value or about $15.3 billion.<\/p>\n<p>In October it emerged that the Biden administration was considering <a href=\"https:\/\/forklog.com\/en\/news\/media-reports-say-us-authorities-plan-to-treat-stablecoin-issuers-as-banks\">the possibility of bringing stablecoin issuers under the regulatory framework<\/a>. They could be subject to the same requirements used to regulate the banking sector.<\/p>\n<p>Earlier, the U.S. Treasury discussed with banking sector representatives the <a href=\"https:\/\/forklog.com\/en\/news\/us-treasury-weighs-threats-and-benefits-of-stablecoins-in-talks-with-banks\">risks and benefits of stablecoins<\/a>. In the same month there was talk of obliging stablecoin issuers <a href=\"https:\/\/forklog.com\/en\/news\/us-treasury-to-require-stablecoin-issuers-to-ensure-their-tokens-can-be-freely-converted-into-fiat\">to ensure their free conversion to fiat<\/a>.<\/p>\n<p> Subscribe to ForkLog&#8217;s Telegram updates: <a href=\"https:\/\/t.me\/forklogfeed\" target=\"_blank\" rel=\"nofollow noopener\">ForkLog Feed<\/a> \u2014 full news stream, <a href=\"https:\/\/telegram.me\/forklog\" target=\"_blank\" rel=\"nofollow noopener\">ForkLog<\/a> \u2014 the most important news, infographics and opinions <\/p>\n","protected":false},"excerpt":{"rendered":"<p>The backing of the Tether (USDT) stablecoin includes short-term loans to major Chinese companies and loans to crypto-lending platforms such as Celsius Network, according to a Bloomberg investigation.<\/p>\n","protected":false},"author":1,"featured_media":50848,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1569,1348,2245,1323,807,1245],"class_list":["post-50847","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-bloomberg","tag-celsius-network","tag-evergrande","tag-investigations","tag-stablecoins","tag-tether-usdt"],"aioseo_notices":[],"amp_enabled":true,"views":"29","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/50847","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=50847"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/50847\/revisions"}],"predecessor-version":[{"id":50849,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/50847\/revisions\/50849"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/50848"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=50847"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=50847"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=50847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}