Tether Limited is back in the news; this time, it has confirmed a banking relationship with a financial institution based out of the Bahamas. The issuer of the controversial USD-pegged stablecoin tether (USDT) announced its partnership with Bahamas-based Deltec Bank & Trust Limited. Tether went a step further by publishing an attestation letter from the bank, showing evidence of its reserves.
In a blog post on its website, Tether stated that Deltec accepted it as a client after a “due diligence review” was carried out, which included an assessment of the company’s ability to maintain its $1 peg, which slipped last month.
The post went on to add:
“This included, notably, an analysis of our compliance processes, policies and procedures; a full background check of the shareholders, ultimate beneficiaries and officers of our company; and assessments of our ability to maintain the USD-peg at any moment and our treasury management policies.”
In an attempt to assure the market of its reserves, Tether also published a letter, purportedly from Deltec, confirming Tether’s reserves with the bank to be $1,831,322,828 as of October 31, 2018 — which is enough to back the remaining 1.78 billion USDT in circulation, as Tether had withdrawn over $1 billion worth of tokens since the beginning of October.
The letter also stated that the confirmation was made “without any liability, however arising, on the part of Deltec Bank & Trust Limited, its officers, directors, employees and shareholders” and that it is “solely based on the information” provided to the financial institution.
When it comes to its reserves, Tether has a history of publishing reassuring statements from credible third parties, but it has so far failed to provide an actual audit.
In June 2018, it tasked a former FBI director’s law firm, Freeh Sporkin & Sullivan LLP, to vet its finances. The law firm said it was confident that Tether had enough in its reserves to back the tokens in circulation as of June 1, but added a caveat that the work it did was “not for the purpose of providing assurance.”
At press time, Tether is currently trading at $0.992952 and there are over 1.7 billion tokens in circulation, according to CoinMarketCap.
Jimmy has been following the development of blockchain for several years, and he is optimistic about its potential to democratize the financial system.