Tether Limited, the issuer of stablecoin USDT, has officially confirmed its cooperation with Deltec Bank, which is a financial institution from the Bahamas. The company decided to confirm once again that it possessed sufficient funds to provide the total amount of issued USDT tokens.
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
Tether Limited claims that Deltec has conducted a thorough review of the company and only after that accepted the project as a client. The financial institution conducted an analysis of the processes, policies, and legal compliance, as well as a full check of information about shareholders, ultimate beneficiaries, and managers of Tether Limited. Among other things, Deltec evaluated the company's ability to bind to the dollar at any time and its reserve management policy.
“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. Deltec reviews our company on an ongoing basis,” added Tether.
Tether provided a link to a letter from Deltec Bank, which stated that at the end of the business day on October 31, 2018, the company's cash value was $1,831,322,828.
If we take into account the current capitalization of USDT ($1.772 billion), then Tether really has sufficient funds to ensure the total volume of issued tokens. Especially against the background of the active competition between stablecoins the massive outflow of funds from Tether continues. Since the beginning of October, the capitalization of USDT has fallen by more than $1 billion.
But it is worth noting a few points. The question of whether tokens were provided at all stages of the company's activity remains open. Another issue is that the letter presented by Tether, contrary to common practice, bears no signature of any official of the bank. So the document causes many questions among skeptics.
Actually, experts already react without enthusiasm to the published document and evaluate it with a fair amount of skepticism. For example, analyst Joseph Young tweeted that Tether “is like that kid in school that always forgets the last page of math homework.”
Dear sirs, Tether got a bank.
— Joseph Young (@iamjosephyoung) November 1, 2018
Still, I think many people would like to see:
1. Evaluation of funds in previous months
2. What the balance of USDT was throughout 2018
Tether is like that kid in school that always forgets the last page of math homework pic.twitter.com/6iRy1Gri9M
Earlier this summer Tether was audited by Freeh Sporkin & Sullivan LLP (FSS) and indirectly proved that it had $2.54 billion in various bank accounts of related banks and investment companies. This audit did not convince the crypto community either. Many experts emphasized that the money could have been deposited on the accounts the day before the audit and left them the day after. Also, the law firm Freeh Sporkin & Sullivan, LLP (FSS) does not specialize in audits. The crypto community noted that the document contained a number of reservations and in no way could indicate the full financial support of USDT tokens.
Tether’s then chief legal adviser, Stu Hoegner, explained the significant reservations contained in the report by a number of difficulties that had occurred while conducting an audit. In particular, he pointed to auditors lacking knowledge about the cryptocurrency industry and it being impossible to quickly adapt accounting standards to the new economic realities.
Later, when the project encountered difficult times and the cost of the token plummeted, Director of Legal Compliance at Tether Ltd. Leonardo Real stated that all USDT tokens were secured by fiat reserves, and the company's assets always exceeded financial liabilities. However, he failed to provide any specific documents again, so his statement did little to convince the critics of stablecoin.
“Tether is the leading provider of tokenized fiat currencies and is listed on many exchanges worldwide. We would like to reiterate that although markets have shown temporary fluctuations in price, all USDT in circulation are sufficiently backed by U.S. dollars (USD) and that assets have always exceeded liabilities,” Real allegedly said.
Rumors that Tether could find a banking partner in the Bahamas first became known in mid-October. Before this, it was reported that Noble Bank, where, allegedly, Tether’s funds were kept, was urgently seeking funding and was threatened with closure. This news provoked a massive exit of investors from the asset and the fall of the value of stablecoin below one dollar.
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