Tether’s Bank Says It Invests Customer Funds in Bitcoin

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Deltec, Tether’s Bahamas-based bank, announced Thursday that it is investing customer funds in Bitcoin.

The announcement, which Hugo Rogers, Chief Investment Officer of Deltec Bank & Trust, made during a video in the reporting year, raises new questions as to whether the dollar-linked USDT stablecoin, which is theoretically also hedged by cash and “cash equivalents”, is considered “Other assets and claims arising from loans” are actually covered in some way by Bitcoin.

“We bought Bitcoin for our customers for about $ 9,300, which has worked very well through 2020. We expect it will work well in 2021 as well as the presses continue to run hot,” Rogers said in the video.

Through a spokesman, Tether’s General Counsel, Stuart Hoegner, confirmed that Deltec is still the stablecoin issuer’s bank.

Deltec hit the headlines in 2018 after Tether released a letter from the bank announcing it owned just over $ 1.8 billion, roughly the same as the USDT in circulation at the time.

A Deltec manager later confirmed that the unsigned letter was authentic.

The next year, the New York Attorney General announced that Bitfinex, Tether’s sister company through joint owners and executives, lost nearly $ 1 billion after its payment processors’ bank accounts were frozen and funds were confiscated. Bitfinex had covered the losses with loans from Tether’s reserves to support the stablecoins in circulation.

The companies currently have an injunction to cease further lending activities among themselves. However, this injunction expires on January 15th.

Tether emissions have been at risk since the injunction was issued, and there are currently around $ 25 billion in circulation. Bitcoin’s price, which some scholars and investors claim is being borne by the issue of USDT, has hit new highs and has also surged above $ 40,000 per coin in the past few months.

UPDATE (January 14, 2021, 11:50 PM UTC): Adds context and links.