On May 21, cryptocurrency outlet The Block published a court transcript, which allegedly proves that some of Tether’s reserves are backed by Bitcoin. However, Bitfinex CTO Paolo Ardoino has recently revealed that Tether only owned 0.076 BTC at the time of the court hearing.
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.— Paolo Ardoino (@paoloardoino) May 22, 2019
No mention of USD reserves
New York Supreme Court Judge Joel M. Cohen was concerned by the fact that Tether, the dollar-pegged stablecoin, is actually partially backed by such a volatile cryptocurrency as Bitcoin.
As the aforementioned transcript shows, Bitfinex’s attorney David Miller admitted that Tether had bought Bitcoin. However, he didn’t specify the exact amount of reserves that are backed by Bitcoin. On top of that, Miller didn’t mention whether Tether actually purchased BTC with its USD reserves.
Prior to the April 24th order … Tether actually did invest in instruments beyond cash and cash equivalents, including Bitcoin, they bought Bitcoin.”
Judging by Ardoino’s tweet, he most definitely denies that that Tether is backed by Bitcoin. He claims that the leading stablecoin issuer has $35 mln in private equity, which allows them to make any kind of investment (even in horses) without having to communicate them.
Another day, another drama
As reported earlier by U.Today, New York Attorney General Letitia James shed light on a massive $850 Tether cover-up that was perpetuated by Bitfinex. In order to restore the funds that were lost to Crypto Capital, the exchange successfully conducted a $1 bln initial exchange offering (IEO).
Meanwhile, Tether’s lawyer confirmed that 26 percent of its reserves are backed neither by cash nor by cash equivalents.