Tether (USDT) Reports On Liquidity As It Secures New Bahamas-Based Banking Partner

Tether Limited, the company that issues controversial stablecoin tether (USDT) that is pegged on the US dollar, has confirmed that it has secured a banking partnership with a Bahamas-based financial institution.

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Tether Limited, the company that issues controversial stablecoin tether (USDT) that is pegged on the US dollar, has confirmed that it has secured a banking partnership with a Bahamas-based financial institution.

Tether (USDT) Reports On Liquidity As It Secures New Bahamas-Based Banking PartnerThe Hong Kong-based cryptocurrency firm, criticized for lacking transparency in its operations, seems to have decided to atone for that, making public its banking deal with Deltec Bank.

The offshore banking institution has been in operation for 72 years, seemingly lending it credence as possibly being a reliable financial institution.

Tether opens account after “due diligence review”

Tether Ltd. posted on Twitter that it now has an account with the bank and attached a letter ostensibly showing the crypto firm’s balance.

Tether (USDT) Reports On Liquidity As It Secures New Bahamas-Based Banking Partner
Source: tether.to/wp-content/uploads/2018/11/Tether-Letter.pdf

And in an announcement published on its website, Tether stated that it opened an account with Deltec after the latter had carried out a due diligence review that lasted several months.

Among other concerns, the bank is said to have evaluated whether Tether displayed the capacity to maintain its USDT token’s U.S dollar peg (parity at $1.00). The review purportedly also focused on the company’s treasury management policies.

But quite remarkably, tether has recently struggled to maintain its dollar parity, faltering to a new 18-month low in October.

Also notable is the fact that Tether destroyed 500 million USDT from its treasury wallet and over $1 billion worth of USDT at the ration of 1:1 has been redeemed in the last one month only, despite the decline.

As per the Thursday’s announcement, the review process garnered positive reviews, which led to the opening of an account.

The company wrote:

“… an analysis of our compliance processes, policies, and procedures; a full background check of the shareholders, ultimate beneficiaries and officers of our company; … garnered positive results, which led to the opening of our bank account with this institution.”

Tether also said that Deltec would continue to review its operations “on an ongoing basis.”

Deltec letter “confirms” balance

Tether also published a letter ostensibly written by Deltec, and which apparently confirms that the firm currently holds $1.83 billion in fiat reserves at the bank. On the face of it, this is more than enough cover for the nearly $1.79 billion in USDT in circulation.

Tether (USDT) Reports On Liquidity As It Secures New Bahamas-Based Banking Partner
Source: wallet.tether.to/transparency

The letter, typed under a Deltec Bank & Trust Limited letterhead, does not have any name(s) and simply states:

“We hereby confirm that, as at the close of business on October 31, 2018, the portfolio cash value of your account with our bank was US$1,831,322,828.”

However, there is a caveat that could be the reason for further concern that the information contained therein isn’t that reliably given.

The unidentified letter writer says that the bank issued the balance confirmation note “without any liability” and that the confirmation “is solely based on the information that is currently in [their] possession.”

Tether published a report in June that detailed the comments of Freeh, Sporkin & Sullivan LLP (FSS), a US legal firm that reviewed the firm’s financial accounts. This was after the exit of the company’s auditor Friedmann LLP in January.

According to the report, the crypto firm held funds that sufficiently covered the outstanding tether tokens at the time.

Earlier, XBT.net reported that Tether had broken its relationship with Noble Bank, a Puerto Rico-based financial institution.

An outdated transparency model

Tether’s efforts to prove its solvency and to publicly share information regarding its banking problems and solutions has yet to please the crypto community.

Although Tether is always at the center of controversy, it has yet to prove insolvable nor has anyone ever reported their inability to cash out their USDT. Further, a few respectable studies have shown no correlation between Bitcoin prices and USDT issuance, so is all the controversy just FUD?

Perhaps, but in the world of Bitcoin, posting on Twitter that everything is okay is not enough, and rightfully so. In fact, the latest stablecoin project by Stably, StableUSD (USDS) will improve on this very weakness.

Stably claims that its banking partner will allow users to audit the company’s bank account in real-time. If Stably can successfully achieve this, it will be the most transparent stablecoin on the market and will likely attract many investors.

Perhaps Stably will motivate Tether and its peers to adopt a solution with Stably’s proposed level of transparency.

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