Pace of withdrawals in May means ‘stablecoin’ company effectively dealing with slow-motion bank run
Tether, the multibillion dollar “stablecoin” that functions as the largest bank in the cryptocurrency economy, has paid out $10bn in withdrawals since the crypto crash started in early May.
According to public blockchain records, $1bn of tether was redeemed – with the cryptocurrency handed back to the company and destroyed as part of the withdrawal process – just after midnight on Saturday. The latest redemption comes after Tether published its latest audited accounts, which show that as of late March the company had backed user deposits with a mixture of US Treasury bills, bonds in other private companies, and about $5bn in miscellaneous “other investments”, including in other cryptocurrency enterprises.
Initially, Tether claimed its reserves were backed one to one with US dollars. However, after an investigation by the New York attorney general, the company admitted that was not always the case and said that its currency was simply backed by “Tether’s reserves”. As part of that settlement, it agreed to publish a quarterly statement that detailed what those reserves comprise.
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