Tether Says Cryptocurrency Backed by Undisclosed Reserves
The company behind the Tether cryptocurrency said an accounting firm provided an assurance that its assets exceed liabilities, though the firm didn’t specify what assets backed the so-called stablecoin.
Tether had been at the center of speculation for years that the coin, used to facilitate trades in the crypto market, wasn’t backed one-to-one with dollars as claimed. In February, the companies agreed to provide quarterly reports to New York as part of a settlement over allegations that it hid the loss of funds and lied about reserves.
The assurance, provided by Cayman Islands-based Moore Cayman, is not part of the reporting requirement to New York. The assurance is not an audit.
“The group’s reserves held for its digital assets issued exceeds the amount required to redeem the digital asset tokens issued” as of Feb. 28, the Moore Cayman report said.
The document noted that, at the reporting date, Tether Holdings Ltd. was the defendant in two legal cases, and “any contingent liability has not been accrued,” the report said.
Tether plans to have another assurance issued on assets and liabilities for a date in late March, and from then on a quarterly basis, starting in June, according to the company.
Tether is critical to the functioning of the crypto ecosystem. About 55% of all Bitcoin purchases are conducted with Tether, according to researcher CryptoCompare.
With a market value of more than $40 billion, Tether is the world’s fourth-biggest cryptocurrency, according to data tracker CoinMarketCap.com. Its market value has grown nearly 10 times in the past year, similar to the increase in Bitcoin.
(Adds Bitcoin in the final paragraph. An earlier update corrected the reference to assets exceeding liabilities in the first paragraph.)