Tether (USDT) has unveiled a relationship with a Bahamian bank that it says has reviewed the company regularly over the last few months. Tether has included a balance statement from the bank which says the project has nearly $2bn in reserve funds- more than the present public market cap.
Tether’s core team said midway through Thursday they had formed a partnership with Deltec, a bank and financial services provider in the Bahamas. The relationship was formed after the bank performed due diligence on the project and interested parties. This process reportedly took months.
The announcement also includes a statement from Deltec which says that at the end of October 31st (Wednesday), the cash value in Tether’s account with the bank came in at $1.8bn; specifically, $1,831,322,828. This is more than $50m more than the public market cap on most data aggregators, which put the figure at $1,776,421,736.
In an official blog post on the Tether website, the project said Deltec had looked into all aspects of the project. This included a look into compliance processes; a background check on the company shareholders; the main beneficiaries; as well as the ability for USDT to maintain a level pegging with the US dollar.
Following this, the bank decided to establish a formal relationship with the stablecoin provider. “This process of due diligence, was conducted over a period of several months and garnered positive results, which led to the opening of our bank account with this institution,” Tether said. “Deltec reviews our company on an ongoing basis.”
Tether was the world’s first popular stablecoin. Pegged to the US dollar, the project says new tokens are created whenever fiat currency is deposited in its reserves. This allows users to enjoy the benefits of a stable currency but be in crypto at the same time. Tether says that tokens redeemed for hard cash are destroyed.
Skepticism has slowly been growing around Tether. Until recently the project claimed to have nearly $3bn in reserve, with the number rising by hundreds of millions at a time. Although it’s widely used, many detractors claim that Tether tokens aren’t in fact backed by anything; making them worthless.
These concerns came to a head last month when Tether’s value began to decline. There were real concerns that the token was about to implode. Exchanges quoted different prices – Kraken went as low as $0.85 – enabling some investors to make substantial sums in arbitrage.
Deltec claims on their website to be a quality banking institution with the aim of enhancing their clients’ capital. Founded more than 70 years ago, originally in Brazil, the bank also offers various private financial services. The partnership ends speculation on the bank used by Tether to hold the reserves.
Tether publicizing bank balances is nothing new. In June, the project hired American law firm Freeh, Sporkin & Sullivan LLP (FSS) to validate that the reserves matched the number of Tether tokens in circulation. They said at the time that the reserves actually exceeded the USDT market cap by approximately $7m.
Although the Tether supply is now nearly a third less than it was at the last ‘validation’, its reserves are proportionately bigger. In real terms, the excess has increased from $7m to $54.9m. There’s no explanation for this. Tether Limited is now $48m richer than they were in the summer even though they’ve had to drastically cut the USDT total supply.
A lot of unanswered questions, but that’s what we’re used to with Tether.
The author is not invested in any tokens mentioned in this article.