On Thursday (1 November 2018), Tether announced that it had set up a banking relationship with Deltec Bank & Trust, which is based in The Bahamas.
This is how Tether announced the news on Twitter:
We are pleased to be able to confirm that Tether has an account with Deltec Bank & Trust Limited https://t.co/LSn64soUsC . Balance confirmation at 2018-10-31 attached.
— Tether (@Tether_to) November 1, 2018
Over on its website, Tether gave an explanation for their silence over the past few several weeks about their banking arrangements. Deltec had only accepted Tether after performing extensive due diligence:
“This included, notably an analysis of our compliance processes, policies and procedures; a full background check of the shareholders, ultimate beneficiaries and officers of our company; and assessments of our ability to maintain the USD-peg at any moment and our treasury management policies. 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.”
To reassure holds of its stablecoin (USDT), Tether stated that:
- Deltec would be reviewing them on a regular basis.
- It is “registered with the Financial Crimes Enforcement Network of the US Department of the Treasury and maintains the highest standards of AML/CFT procedures.”
- USDT is fully collateralized with USD deposits at its bank(s).
However, to really hammer home the point that it was solvent (unlike what some people were saying on Twitter and on other social median platforms), it provided a letter dated 1 November 2018 from its new bank that seems to confirm that Tether does indeed have a balance in its USD account of $1,831,322,828, which exceeds the amount of tethers currently in circulation:
Although this letter will by no means satisfy Tether’s harshest critics (such as Twitter account “Bitfinex’ed”) since it does not qualify as any kind of audit, there is no name of a bank official on the letter, there is no official stamp, and there is only the mention of the USD balance as of close of business on 31 October 2018 with no accompanying statement showing when the account was opened and what activities have taken place since that date.
Twitter user “Bitfinex'ed”, who is probably the most vocal critic of both Tether and Bitfinex, had this to say about today’s announcement:
We still have no idea what the bank balance was last month before they reduced Tether supply by over a billion Tethers.
The mad rush to remove tethers from circulation may have been to make the amount match their current bank balances.
They need to show past months too.
— Bitfinex'ed 🐧 (@Bitfinexed) November 1, 2018
However, with regard to full audits of fiat-backed stablecoins, we should recall the words of Cameron Winklevoss, co-founder and President of Gemini Trust, who said on 17 October 2018:
There is no financial report framework w/r/t to audit conformity w/ a stabelcoin. So you can't perform an “audit.” You must instead rely on a 3rd party to attest to whether an assertion (that there is a 1:1 peg) is accurate.
— Cameron Winklevoss (@winklevoss) October 17, 2018
According to data from CryptoCompare, Tether (USDT) is currently trading at $0.9926, and the number of tethers in circulation is 1,776,421,736.
Featured Image Courtesy of Tether
