The stablecoin reports sufficient reserves, but an investigation of bank transfers to the Bahamas reveals that the service bank of Tether, Inc. may have never deposited funds to the country.
Despite claiming to have backing for each Tether (USDT) in dollars, the Tether Inc. company may not have the funds, new evidence suggests. Based on the claims from Tether to be using the services of Bahamas-based Deltec bank, researchers tried to glean information from the Central Bank of the Bahamas about large amounts of dollars entering the local money supply.
The central bank’s monthly reports were used to support the claim that Tether did not, in fact, move funds into Deltec Bank. This information goes counter to an earlier claim, in a letter allegedly sent by Deltec Bank, suggesting that Tether has sufficient funds to back all USDT.
Analysts at the Zerononcense blog also pointed out that at the time when Tether claimed to move funds from Noble bank, its previous provider, into Deltec, there is no corresponding change in the reports of the Bahamas central bank. However, the analysis did not reveal any significant change in the foreign reserves that flowed into the Bahamas banking system.
The recent analysis goes counter to an earlier Bloomberg report, which claimed to have evidence of funds moved into Deltec Bank.
The suggestion that USDT are not backed by dollars, and the funds may be anywhere in the world or not exist at all, has worried the markets for months, especially after the drop in Bitcoin (BTC) prices deepened. The importance of USDT in the cryptocurrency trading ecosystem remains high - as of December 26, more than 59% of all BTC trades were in USDT pairs.
Also, the stablecoin has now taken over 26% of all digital asset trades, up from usual levels around 18% a few months ago. At the same time, the share of BTC in all trades was lowered to 30%, revealing that USDT pairs are becoming indispensable, and traders are selling into USDT positions for extra stability.
The Tether treasury mopped up nearly 1.3 USDT from circulation at the end of October, while burning 500 million USDT, keeping the rest for interventions. As of December 26, the Treasury held 626,678,763 USDT, and has not intervened by injecting coins on Bitfinex since November 26.
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