Yesterday, Bloomberg’s Businessweek published a feature about Tether’s $69 billion stablecoin, or more specifically about its backing assets. A highlight of the piece is the author Zeke Faux’s description of Tether as “a company that seemed to be practically quilted out of red flags”.
One of the things that alarms regulators is its rapid growth. A year ago, there were just $16 billion Tethers in circulation. And there’s always been a question mark over the interpretation of how it’s 100% backed. Following an investigation, the NY Attorney General came to a settlement that included Tether and sister company Bitfinex paying $18 million and banning them from trading or having any activities in the state.
John Betts, the Former CEO of Noble Bank International in Puerto Rico, which provided banking services to Tether, gave a soundbite for the Bloomberg report. “It’s not a stablecoin, it’s a high-risk offshore hedge fund,” said Betts. “Even their own banking partners don’t know the extent of their holdings, or if they exist.”
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