© Reuters
By Geoffrey Smith
Investing.com — The world’s largest stablecoin by market value, , continued to see client outflows on Wednesday, despite denying what it called “false rumors” about loss exposure.
At least four transfers from cryptocurrency exchange Bitfinex to Tether’s cash wallet were made during the day, with a combined value of $771 million. Such transfers typically occur when customers convert their digital assets back into fiat currency, such as dollars.
As a result, the supply in circulation fell a further 1.1% to 70.1 billion. It was 83 billion in April, when the collapse of the Luna network led to a first wave of withdrawals.
The pullbacks have been accompanied by a widespread rout of cryptocurrency assets but, on the other hand, they have yet to translate into a full-scale speculative attack on Tether’s 1:1 peg to the dollar, as this happened in April after the Terra Luna network collapsed.
The collapses of networks such as that of Terra or – last weekend – Celsius are stark reminders of the importance of adequate support for stablecoins, ensuring that they can maintain their value against traditional currencies. Tether said on Wednesday it exited its position with Celsius “without any loss,” and also denied any exposure to struggling crypto investment fund Three Arrows Capital.
Tether’s reserves have been the subject of some skepticism, due to its history of misleading claims. In March, it said 47% of its reserves were held in short-term US Treasuries, but about $20 billion was held in commercial paper. Tether has not disclosed which credit is behind these CPs.
This lack of information has been filled by rumors in recent days that the bulk of CP is issued by low-quality Chinese and Asian names and is trading at an unusually high discount of 30%.
“These rumors are completely untrue and likely propagated to cause further panic to generate additional profits in an already stressed market,” Tether said in a statement Wednesday.
Tether said it had reduced its CP holdings to $11 billion since the end of the first quarter, and said that would drop to $8.4 billion by the end of the month.
“This will gradually decrease to zero without incurring any losses. All treasury bills are maturing and will be converted into short-term US Treasuries,” Tether said.