Tethers Offshore Bank Discloses Large Position in Bitcoin – Decrypt

In brief

Deltec, the Bahamas-based bank that holds reserves for stablecoin issuer Tether, stated today that it has a large position in Bitcoin.

Chief Investment Officer Hugo Rogers, in a 2020 review video, said of Deltecs holdings:

It also includes a large position in bitcoin, which has received a lot of attention recently. We bought bitcoin for our clients at about $9,300, so that worked very well through 2020. And we expect it to work well in 2021 as the liquidity crisis continues to run hot."

Tether is perhaps Deltecs most famous client. According to market data provider CoinMarketCap, Tether has a circulating supply of 24.3 billion USDT. Since the stablecoin issuer claims each USDT is fully backed by our reserves and each USDT is pegged to the dollar, that means it should have assets worth $24.3 billion in the bank. According to Tethers website, its reserves include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties.

So, the question is: Is Tether backed, in part, by Bitcoin? If so, a crash in the price of Bitcoin could reduce investors ability to remove funds.

And the answer is...unclear.

Tethers last published transparency update, from June 1, 2018, claims a total of $2.54 billion in USD distributed across two bank accounts. That amount was more than its reported market cap at the time.

A letter produced by Tether from Deltec, dated November 1, 2018, seemingly confirmed that Tether was a client, though it used creative wording to discuss how many dollars were in the account: We hereby confirm that, at the close of business on October 31, 2018, the portfolio cash value of your account with our bank was US$1,831,322,828. (Emphasis ours.)

Moreover, Deltec hasnt divulged which clients its holding Bitcoin for, as Tether isnt Deltecs only customer. In fact, at least one other crypto company seems to use it as well, crypto derivatives exchange FTX.

So, this could all be much ado about nothing, smoke without fire.

But others find it curious, especially as crypto exchange Bitfinex, which shares a leadership team with Tether, has been rumored to own a large stake in Deltec.

Tether isnt just the subject of rumors. Its also the subject of a New York Attorney Generals Office investigation. The NYAG has been looking into whether Bitfinex gave Tether loans to hide $1 billion in losses.

None of this has stopped Tethers forward progress. It is the third-largest cryptocurrency by market capitalization and remains the most-used stablecoin.

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Tethers Offshore Bank Discloses Large Position in Bitcoin - Decrypt