After a Bloomberg report that accused Tether of not having enough reserves to back its stablecoin issuance and accusing Tether’s Chief Financial Officer, Giancarlo Devasini of using the company’s reserves to make investments which is in direct contradiction of Tether’s public position that its stablecoin is fully backed at all times, Tether has come out to refute these allegations, stating that the Bloomberg article is filled with “outlandish anecdotes.”
The Bloomberg report written by Zeke Faux also accused Tether of investing in Chinese firms and issued crypto-backed loans, “worth billions of dollars.” The reporter was only able to confirm one bank in the Bahamas was working directly with Tether.
Faux further stated that “Tether still hasn’t disclosed where it’s keeping its money. If Devasini is taking enough risk to earn even a 1% return on Tether’s entire reserves, that would give him and his partners a $690 million annual profit. But if those loans fail, even a small percentage of them, one Tether would become worth less than $1.”
Tether’s response
Tether immediately responded to the article in a blogpost refuting all the allegations made by the Bloomberg reporter. It stated, “The Bloomberg BusinessWeek piece published today is a one-act play the industry has seen many times before, taking snippets of old news from various places and dubious sources, and making it fit a pre-packaged and pre-determined narrative.
“This article does nothing more than attempt to perpetuate a false and aging story arc about Tether based on innuendo and misinformation, shared by disgruntled individuals with no involvement with or direct knowledge of the business’s operations. It’s another tired attempt to undermine a market leader whose track record of innovation, liquidity, and success speaks for itself.”
Tether, in the blogpost also accused Zeke Faux of being biased and relying on the testimony of a the former head of Noble Bank, whom Tether fired as its banker.
“The reporter refuses to let the facts get in the way of the story he wants to tell, instead relying on John Betts, the former head of Noble Bank, whom Tether fired as its banker. In an ongoing lawsuit, Betts has also been accused of engaging in egregious and wasteful self-dealing and seeking to enrich himself at Noble’s expense. It shows a complete lack of diligent research and is filled with outlandish anecdotes that are not geared toward ethical reporting but character assassination. This story works hard to discredit Giancarlo Devasini and Tether’s executives with sources that are far from credible. Following the last Bloomberg story, Tether’s CFO has in fact received many messages from those inspired by his story, coming from a medical background to revolutionize the financial industry,” Tether said.
Tether further stated that their goal is to work for the underrepresented and working towards a more financially inclusive world though its agenda may, “threaten the establishment of traditional financial systems.”
The Tether concluded by stating, “Here are the facts: All Tether tokens are fully backed, as we have consistently demonstrated. The company has taken a leadership position in transparency, providing quarterly assurance attestations (as recently as the June 30, 2021 target date) confirming that all Tether tokens are fully backed. And these attestations and statements also confirm the vast majority of the commercial paper held by Tether is in A-2 and above rated issuers.”
According to the Bloomberg report, if these allegations against Tether are true, “Tether is a Ponzi scheme, it would be larger than Bernie Madoff’s.”
Tether’s stablecoin USDT is still trading $1 at the time of this reporting.