A reward of up to $ 1 million has been offered to anyone who can shed light on the precise backing of Tether reserves.
That endorsement got a bit darker, after Celsius Network CEO Alex Mashinsky said that Tether mints new USDT in exchange for crypto assets, which appears to conflict with Tether's own terms and conditions.
The "forensic financial investigation" firm Hindenburg Research tweeted on October 20 to its 171,000 followers that it has "doubts about the legitimacy of Tether" and offered a reward of up to $ 1 million for important details about the Tether reserves that it claims , could represent a problem. threat to investors on a "systemic" scale.
โTether is a key pillar of the multi-billion dollar crypto market. However, despite his repeated claims of transparency, his disclosures about his holdings have been opaque. "
"The company claims to have a significant portion of its reserves in commercial paper, but has disclosed virtually nothing about its counterparts," Hindenburg Research added.
But, as more than a few observers pointed out, $ 1 million isn't a lot of money to dump on a token with a $ 70 billion market capitalization.
Tether will gladly pay you 10 times this in Tethers to keep your mouth shut, I bet https://t.co/CSgei3yWIx
- Cas Piancey โslightly interestingโ (@CasPiancey) October 19, 2021
Tether has been the subject of intense scrutiny, and regulators took action against the company on multiple occasions over the composition of its reserves. In May, Tether published a loose reserve breakdown in May, it showed a lot of unspecified commercial paper, along with minimal cash or bank deposits.
On October 15, Tether and its sister company Bitfinex reached an agreement pay $ 42.5 million to the Commodity Futures Trading Commission, which stated that Tether did not have sufficient cash reserves for two-thirds of the period between 2016 and 2018.
Tether reached a settlement, but denied the claims, noting that "the Tether tokens were not found to be not fully backed at all times, simply that the reserves were not all in cash and all in a bank account titled in Tether's name. , at all times".
He went on to say, "As Tether represented in the Order, he has always maintained adequate reserves and has never failed to satisfy a request for redemption."
Related: Crypto Lending Firm Celsius Network Raises $ 400 Million
Meanwhile, Celsius CEO Alex Mashinsky is facing his own regulatory issues after the New York Attorney General's Office I started to lookto your signature and another stablecoin lending platform this week.
In a subsequent interview, Mashinsky told the Financial Times on October 19 that, as part of a loan agreement, Tether minted new USDT tokens in exchange for digital assets:
โIf you give them enough collateral, liquid collateral, Bitcoin, Ethereum, etc. . . they will coin Tether against you. "
"A new USDT is issued for such loans," he added, noting that the new USDT is later destroyed after the loan is closed so as not to "permanently increase the USDT in circulation."
Such a loan structure at first glance would seem like a violation of Tether's terms of service which state:
โTether will not issue Tether tokens for consideration consisting of digital tokens (eg Bitcoin); Money will only be accepted at the time of issue. "
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