Tether, the popular stablecoin USDT issuer, has added more than 82,000 BTC (worth nearly $5.6B) to its reserves. The addition of such an amount would further stabilize and add credibility to the USDT stablecoin.
Tether also has about $3.87 billion in gold reserves, a demonstration of its commitment to ensuring it has sufficient reserves in safe-haven assets. With its huge BTC reserves, Tether is showing a strong belief in BTC as an essential asset that helps the USDT maintain its USD peg.
In addition, the transparency in its reserve assets will help improve investor confidence, considering past instances where there have been contentions about Tether’s reserves.
Impact on the Crypto Market
Diversification into Bitcoin and gold is proof of the firm’s prudent risk management strategy and contributes to the confidence factor in USDT during times of market volatility. Tether’s additional BTC purchase could also add demand pressure for BTC.
More institutional investors would become interested in investing in Bitcoin, leading to a surge in the coin’s price. Moreover, the firm’s periodic disclosures about its reserves will boost market confidence and influence investor behavior positively.
However, analysts also warn that this high reliance upon BTC could come with risks of volatility. For instance, a sudden plunge in the price of Bitcoin may raise concerns over USDT’s stability among more risk-averse investors.
However, the USDT issuer’s approach offers a diversified safety net to cushion against sudden market fluctuations.
Legal Scrutiny Surrounding Tether
While Tether continues to fortify its reserves and keep USDT stable, the firm has not been without controversy. Tether has come into the crosshairs of the US government at various times.
There have been many deep probes into the operations of the company. According to those familiar with the matter, the latest investigation is from the Manhattan Attorney’s office.
Manhattan authorities are investigating whether bad actors are using the firm, its stablecoin, or both for illicit activities. This is the latest chapter in the firm’s legal saga.
Notably, the company had its first share of lawsuits in 2012 when there was an allegation against Bitcoinica, whose source code was used by Tether’s sister company, Bitfinex. Since then, Tether has been subjected to various forms of government scrutiny through legal means.
A Timeline of US Government’s Actions Against Tether
The company has been investigated by both the Commodity Futures Trading Commission and the Department of Justice. Some highlights include a CFTC probe into Bitfinex in 2015, an investigation of USDT-related bitcoin price manipulation by the DoJ and the CFTC in 2018, and a $41 million fine for Tether over false declaration of its USD reserves by the CFTC in 2021.
The above timeline depicts the constant battle between the stablecoin issuer and the US regulators. However, Tether finds ways to satisfy the regulator’s demands, establishing itself as a leader in the stablecoin space on each occasion.
Ardoiono Addresses Reserves Allegations and Investigations
Meanwhile, Tether’s Chief Executive, Paolo Ardoino, has addressed concerns about the company’s reserve assets and allegations that the firm is under investigation by US authorities. While speaking at a recent event in Switzerland, Ardoino provided a full breakdown of the firm’s reserves in Bitcoin and gold.
He added that the company is playing a pivotal role in the crypto market, which explains why the USDT’s market cap has surpassed $120B. Furthermore, Ardoino denied several reports that the firm is under investigation by the US authorities.
The Tether CEO also disclosed that the firm has been cooperative with law enforcement agents since it began operations ten years ago. He further said that the company has helped various agencies worldwide to recover almost $110 million in fraud and other illegal activities.
Hence, he asserted that the stablecoin issuer will not hesitate to cooperate with authorities whenever and wherever their attention is needed.
