Tether Holdings Ltd. at one point counted securities issued by Chinese companies among the reserves backing its USDT stablecoin, according to Bloomberg News.
Tether at a point in time held securities issued by state-owned Chinese companies including Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Agricultural Bank of China Ltd, according to documents Bloomberg obtained from the New York State Attorney General’s office.
This comes after a Bloomberg investigation from October 2021 found evidence that Tether’s reserves included billions of dollars in loans to Chinese companies.
At the time, Tether denied having any exposure to crisis-hit real estate developer China Evergrande Group’s debt, but didn’t speak to whether it held securities at other Chinese companies or issuers, according to Bloomberg.
USDT is the largest stablecoin by market capitalization, according to CoinMarketCap, and has been questioned by regulators on what exactly is backing it.
New York Attorney General Letitia James accused Tether of not being fully backed at all times after reaching a settlement with the firm in February 2021.
“Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system,” James said in 2021.
Tether’s response
Tether responded to the news about its reserves being backed by Chinese securities in a blog post on Friday.
“Tether is in a completely different position compared to 2 years ago. It demonstrated, leading the industry during the biggest black swan events in 2020 and 2022, that its reserves are extremely liquid, of high quality and ready to be made available to support any size of redemption, as shown in 2022, when Tether repaid US$7 billion in 48 hours, almost 10% of its reserves at that time,” the firm said.
