According to the settlement reached between the Attorney General of New York and the issuer of the market’s first stablecoin, Tetherthe latter had undertaken to reveal periodically the composition of its reserves.
Afterwards, CoinDesk and other parties had claimed, under the New York Freedom of Information Act (Freedom of Information Law), the public disclosure of documents relating to the investigations carried out by the Attorney General. The information in these documents presents an overview of Tether’s financial situation between 2019 and 2021.
Lending operations carried out by Tether
Tether had revealed that he had engaged in lending transactions to “a select group of large customers”. The company claimed that these loans were over-collateralizedwith collateral above the face value of the loan and backed by highly liquid assets.
Between June 2019 and May 2021, stablecoin issuer USDT granted 694 secured loans totaling $11.6 billion. 89% of the total amount of these loans were issued against BTC as collateral. 9% of these loans used ETH as collateral. The remaining 2% was split between Tether Gold (XAUT) and other assets. $8 billion in loans were repaid during this period.
Given the many concerns related to the uncertain market environment, the USDT issuer continued its commitment to reduce its secured loans to zero. The amount of its guaranteed loans fell from 8.7% to 6.5%. Meanwhile, Tether’s holdings of US Treasuries hit an all-time high of over $53 billion, which is more than 64% of its total reserves.
Chinese commercial papers used as collateral by Tether
Previously, rumors had swirled about Tether being exposed to Chinese commercial papers, something Tether had vehemently denied.
However, these documents prove that the company actually relied on some Chinese stocks to support USDT. These securities included, in particular, bonds issued by Industrial & Commercial Bank of China Ltd.., there China Construction Bank Corp. And Agricultural Bank of China Ltd.. Tether also held securities issued by other foreign companies, including Deutsche Bank And Barclays Bank.
For its part, Tether claimed that these commercial papers did not represent a high risk since they mainly concerned the banking sector. Tether pointed out that:
“The Chinese papers held were liquid and issued by major and well-known issuers in the international market. All these issuers had a stable financial situation. »
Tether also added that much of this paper was and is held by some of the world’s largest investment managers within conservative portfolios. To date, the company no longer has any commercial paper to support its reserves. She has in fact proceeded to replaced by US Treasury bonds.
Despite the criticisms, the market’s first first stablecoin now seems to be in a more solid position than its main competitors, USDC and BUSD. Tether’s latest quarterly results showed the company posted a record net profit of $1.48 billion, pushing its excess reserves to another record high of $2.44 billion. In addition, Tether has also worked to take steps to limit its reliance on pure bank deposits as a source of liquidity, with the latter having been reduced by more than 90%.
Sources: Tether, Decrypt, Bloomberg, Tether