Tether to Updated the USDT "100% Backed" Policy

Now, “reserves ... from time to time, may include other assets and receivables from loans made by Tether to third parties"
14 March 2019   276

The USDT token linked to the US dollar, as was assumed until recently, is fully secured with hard currency. However, the latest revision on the website of the issuer of stablecoin of Tether company says that the situation is now different.

The 100% Backed section at Tether websites says: “reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”)."

At the same time, the company insists that each token is still pegged to the USD in the ratio of 1x1.

Earlier, Tether stated that all USDT coins are 100% secured by the US dollar. In part, these allegations at the end of last year were confirmed by the Bloomberg publication.

The new edition on the Tether website has already been commented on by users of Reddit. According to Toyake, you can now officially say that the USDT is not 100% guaranteed by the US dollar.

Tether to Invest Some Assets in Bitcoin

Stablecoin issuer's attorney David Miller said it at the Supreme Court of the State of New York
22 May 2019   89

According to court documents received by The Block, Tether invested part of Bitcoin and other assets, including cash and cash equivalents.

At the end of April, the New York Attorney General’s Office charged Bitfinex with the fact that, having suffered a loss of $ 850 million, it concealed this fact, using the funds of its affiliated company Stablecoin Tether to cover the damage.

Shortly before this, Tether quietly updated the USDT tokens security policy. According to the updated edition, the company’s stablecoins can be provided with reserves included "traditional currency and cash equivalents", as well as, “other assets and receivables from loans made by Tether to third parties.” Also, as reported, the statement used to read: “Every tether is always backed 1-to-1, by traditional currency held in our reserves.”

Prior to the April 24th order … Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin, they bought bitcoin.
 

David Miller

Attorney, Bitfinex

Also during the hearing, Miller complained that the Attorney General of New York restricts Tether in investment activities.

In turn, the New York Supreme Court Judge Joel M. Cohen questioned the logic of the company, finding a contradiction in investing stablecoins in high-volatile assets, like Bitcoin.

Tether sounded to me like sort of the calm in the storm of cryptocurrency trading. And so if Tether is backed by bitcoin, how is that consistent? If some of your assets are in a volatile currency that Tether is supposed to somehow modulate, that seems like it’s playing into what they are saying.
 

Joel M. Cohen

Judge, New York Supreme Court

He replied that only a small amount had been invested. Also, according to him, according to the updated Tether collateral policy, collateral is allowed not only in cash and cash equivalents, but also in other assets.

The New York State Supreme Court upheld injunction on the use of Tether Limited’s reserves for the investment activities of other companies, in particular the Bitfinex cryptocurrency exchange.

Also, Bitfinex cannot use Tether assets for lending or for other needs, if this is not required by normal business practices. In addition, Tether is forbidden to provide funds from its reserves to employees, unless it is a question of salaries and standard payments.

At the same time, the ruling states that Tether can invest its reserves in the ordinary course of business. The company had already stated at the previous court session that it had used its reserves for investment purposes, but it was not known what investments we were talking about.