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Tether Admits That It Used Reserves To Invest In Bitcoin, Other Assets

24 May 2019

Amid the battle between the New York Attorney General (NYAG), cryptocurrency exchange, Bitfinex and stablecoin Tether (USDT), there have been some developments that may not prove conducive to the latter two.In some newly obtained court documents, which were procured by the news portal, The Block, Tether admitted that the company has historically used some of its reserves to make investments in bitcoin and “other assets.”In March this year, the stablecoin stated that its tokens were not fully-backed by US dollars, something which has been the subject of debate and suspicion for a long time. While critics of Tether have long argued that its claim of every token being backed 1:1 by US dollars is unreliable, the company had till now been trying to cover itself up. There has always been a demand in the community to get the reserves of Tether audited by professional 3rd party auditors, but that demand was never met by the company. In November last year company for the first time revealed its banking partner and confirmed that it has got more than $1.8 billion in its account, but still it didn’t agree to the demand of external audit.Following that, in April, the Attorney General, Letitia James had reported that the ‘loss of funds’ and movement of reserves was not disclosed by operator of either Bitfinex or Tether, iFinex. Apparently, this had led to the exchange had “engaged in a cover-up to hide the apparent loss of $850 million of co-mingled client and corporate funds.Now, the truth emerged, when David Miller, an advocate appearing for Bitfinex said, “Prior to the April 24th order … Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin, they bought bitcoin.”Miller further alleged that the office of NYAG was “trying to act like a regulator, in restricting what these companies could do. The issue with respect to the application, for the 354 order, was about a purported nondisclosure of a conflicted transaction.”Recently, Paolo Ardoino, the CTO of Bitfinex said, “At May 16, 2019, Tether owned 0.076 BTC at address 1NTMakcgVwQpMdGxRQnFKyb3G1FAJysSfz. Every time Tether (OMNI) is issued or redeemed, Tether must pay mining fees in BTC. Note: Tether has > 35m in shareholder equity, so could even buy a horse without having to communicate it.”Yesterday's breathless "reporting" about this was neither breaking (as advertised) nor news. @bitfinex @Tether_to https://t.co/oTswwAPCeT— Stuart Hoegner (@bitcoinlawyer) May 22, 2019Adding to that, Stuart Hoegner, General Counsel for Tether and Bitfinex stated, “Yesterday’s breathless “reporting” about this was neither breaking (as advertised) nor news. @bitfinex @Tether_to.”Finally, after all these trials and speculations, the unvarnished truth will be out in the open.Liked what you read? Join us on Telegram

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