Author: Tether; Translator: ChatGPT
Since reaching a settlement with the New York Attorney General’s Office, Tether has fulfilled its quarterly reporting obligations. Tether has always been committed to transparency and places customer privacy and security first.
Following this settlement, CoinDesk requested that Tether make available relevant materials from the first quarter report under FOIL. Tether previously opposed this disclosure to prevent the public dissemination of confidential customer data and sensitive proprietary information that could be exploited by malicious actors. After vigorously defending its position, Tether withdrew its opposition and allowed CoinDesk and other media outlets access to these documents to demonstrate its commitment to transparency and openness, and to cease ineffective litigation in the United States.
Tether’s situation is entirely different from two years ago. In the largest black swan events of 2020 and 2022, it demonstrated industry leadership, proving its reserves are highly liquid, of high quality, and available to support exchanges of any size, such as redeeming $7 billion worth of reserves in 2022, almost equivalent to 10% of the reserves at that time. This is just one example of the power we can demonstrate under public stress testing.
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Regarding the lending plan in the latest verification report, Tether’s transparency is crystal clear. There is nothing new revealed as we have been committed to being open. Tether has never and will never put the integrity of its reserves at risk. This has been demonstrated time and time again, not only in promptly redeeming redemption requests, but also in the highest transparency of reserves.
Tether is committed to maintaining the highest standards and strives to develop risk indicators and risk measurement processes. These powerful mechanisms enable its investment and finance teams to comprehensively evaluate the risks involved in any financial transaction of the company. With a firm understanding of the lending business and regulatory environment, Tether actively strives to achieve and maintain its business goals while adhering to an unchanged risk management culture.
In addition, our commercial paper always maintains a rating of A2 or higher. We take pride in our firm commitment to accountability and the highest standards.
The information released, if correctly read and understood, will only publicly demonstrate the legitimacy of Tether’s business and the existence of its reserves. However, as in many previous cases, information is often intentionally isolated or distorted, used to create sensational stories aimed at Tether or the entire cryptocurrency industry.
Tether is proud to be a leader in the stablecoin community. The company takes pride in its ample liquidity, strength, and stability, which have been put to the test in many black swan events that have devastated parts of the crypto industry and traditional finance. Tether will always defend its customers, personnel, and community from attacks.
With this information now public, Tether hopes to provide a factual reference that explains what the materials contain and do not contain.
Among the disclosed documents are Tether’s bank statements, which show the integrity of its banking relationships and reserves, as attested to by independent third-party verification that we have publicly disclosed.
These statements demonstrate how Tether applies best practices in asset management: short duration and diversification, as evidenced by the investment portfolios listed in each bank statement.
These materials do not represent Tether’s current situation (as the data received by the media is old data from two years ago), and Tether has taken a series of actions, including reducing its commercial paper holdings to zero last year and significantly reducing its secured loan portfolio, with the goal of reducing it to zero in the coming months.
Tether was the first stablecoin to disclose the composition of its reserves and continues to provide quarterly attestation reports completed by independent accountants. Tether’s attestation reports have gradually provided more transparency compared to the examinations provided to the New York Attorney General’s Office. In fact, Tether’s latest attestation report shows a record net profit of $1.48 billion, bringing Tether’s reserve surplus to a record high of $24.4 billion, with bank deposits decreasing by over 90%.
The attestation report also shows that Tether remains committed to reducing its secured loans to zero, reducing them from 8.7% to 6.5%, while Tether’s United States Treasury holdings have reached a record high of over $53 billion, accounting for over 64% of its total reserves.
Tether is committed to continuing to be a transparency leader in the crypto industry, taking action to provide information to the community and stakeholders and demonstrating ample support.
In addition, Tether regularly collaborates with law enforcement and has assisted over 150 investigations on four continents. In just the past 18 months, Tether has lawfully complied with regulatory and law enforcement requests and recovered approximately $200 million worth of USD₮, returning it to rightful owners.
It is likely that Bloomberg, CoinDesk, or other media organizations decided to provide this information to readers in haste, without sufficient attention to current events or facts. We do not condone this behavior, but our priority is our clients and our continued support for the entire crypto community.
What happened on June 15, 2023?
Earlier this year, Tether completed its reporting obligations to the New York Attorney General’s Office pursuant to the 2021 settlement terms. The settlement agreement required Tether to report on its reserves every quarter for two years. Tether fully complied with this obligation and there is no indication of incomplete disclosure or inadequate reserves. We are pleased to have fulfilled our obligations under the settlement agreement. Currently, Tether’s market capitalization is at an all-time high, stronger than ever before.
Shortly after the 2021 settlement, CoinDesk and others made FOIL requests under the New York State Freedom of Information Law for documents related to Tether’s first quarterly report. On June 15, 2023, the New York Attorney General’s Office provided the requested documents to CoinDesk and others. The reason for providing these documents is that Tether decided not to oppose the FOIL requests.
Why didn’t Tether/Bitfinex fully appeal?
Tether initially brought these litigation proceedings to prevent the public dissemination of confidential customer data and to prevent sensitive business information from being maliciously used. However, our continued and manifest commitment to transparency means that we must place openness above further time-consuming and ineffective litigation in the United States, which would distract attention from the real issues facing our community.
If Tether/Bitfinex intended to disclose this information, why did they wait until now to stop fighting? Why this particular juncture in the litigation?
At this stage of the litigation, Tether had to decide whether to fully appeal. The sensitivity of this information being made public is not the same as it was two years ago, at least not for Tether’s reserves. At this stage, we need to place openness above further time-consuming and ineffective litigation in the United States, which would distract attention from the real issues facing our community.
Does Tether/Bitfinex support the release of customer information to news organizations?
Absolute not. One reason why Bitfinex and Tether fought CoinDesk’s FOIL request was because they wanted to prevent the public dissemination of customer data. We urge CoinDesk and other media organizations not to publicly share any past or present customer names, in order to avoid physical or digital risks to anyone in the community.
Are you forced to compromise on this issue?
Not at all. Tether originally brought these lawsuits to prevent the public dissemination of confidential customer data and to prevent sensitive business information from being maliciously exploited. We still urge CoinDesk and others not to publicly share any past or present client names, in order to avoid physical or digital risks to anyone in the community. We could have continued to appeal, but our ongoing commitment to transparency and clear promises meant we had to prioritize openness over further time-consuming and ineffective U.S. litigation, which would distract from the real issues facing our community.
Did Tether mention not having contact with Chinese commercial bills?
This is incorrect. Tether has always denied rumors about contact with companies such as Evergrande. Again, this is completely incorrect, and these disclosures prove it.
Okay, but why are there so many Chinese commercial bills?
Tether’s holdings of Chinese commercial bills are mainly concentrated in the banking sector. However, all Chinese bills held are liquid and issued by large and well-known issuers on the international commercial paper market. All of these issuers are stable, and most of the bills are held by some of the world’s largest investment management companies for conservative investment portfolios. The credit ratings of the Chinese bank-related commercial bills involved are A1 or higher.
In addition, it is worth noting that Tether reduced its holdings of commercial paper to zero last year. Tether has not lost a penny because of any commercial paper, including Chinese commercial paper.
What role does Bitfinex play in reserve adequacy?
Bitfinex is a borrower of an interest-bearing loan, which was fully repaid in 2021 ahead of schedule. The loan facility is now closed and cannot be reopened. Bitfinex remains the preferred platform for Tether to purchase BTC. Tether is considered an ordinary user.
Does Tether control the collateral wallet? Who are the customers who provide collateral? How is the collateral valued?
The collateral wallet is fully controlled by Tether. Collateral is valued at market prices, and an effective margin call system is in place. Tether has conducted lending transactions in the past (disclosed in independent third-party assurance audits), providing loans to some larger Tether clients. These loans were overcollateralized, and Tether has never lost a penny on them, while some parts of the traditional finance industry and other parts of the community engaged in risky lending. Tether stands for financial freedom and, for the protection of customer privacy, does not disclose the names of its customers. We urge anyone who receives this information not to publicly disclose wallet addresses, names and other identifiable information, in order to avoid risks to the security and privacy interests of third parties.
Have several clients’ personal and corporate accounts been closed? Should these accounts have been opened?
We regret that the names may have been made public by media outlets, as Tether is committed to protecting the privacy of our clients. It is worth noting that if this information has been made public, it has not been by Tether but by the New York Attorney General’s Office and media outlets. We do not wish to comment on individual relationships, but everyone has passed rigorous compliance checks required by Tether’s compliance policies and is subject to ongoing monitoring.
Okay, since you are so transparent, can you share these documents with us?
No. We have given up efforts to block CoinDesk and others in favor of openness, rather than further time-consuming and ineffective US litigation that would distract from the real issues facing our community. However, this is different from us releasing the information ourselves. We still believe that the information in these disclosures could be used to expose the identities of clients, both current and future. Additionally, our compliance policies could be used to circumvent our controls and weaken our terms of service. We will not put our clients at risk, nor will we face any legal claims by disclosing this information.
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