Tether responds to everything

Author: Tether

Compiled by: Odaily Planet Daily

On June 16, the New York Attorney General's Office (NYAG) disclosed a document regarding Tether to the media.

This document is the first quarterly report provided by Tether to the NYAG following the settlement reached in 2021. Due to the inclusion of a significant amount of previously undisclosed information (such as holding commercial paper from certain Chinese banks and having customer relationships with Celsius Network), the release of this material quickly caused a stir in the market.

At around 8 PM Beijing time tonight, Tether officially published a lengthy article responding in detail to the contents of the document and the FUD rumors.

Below is the full content, compiled by Odaily Planet Daily.

Tether Statement

Since Tether reached a settlement with the New York Attorney General's Office, we have fulfilled our quarterly reporting obligations. Tether remains committed to transparency and prioritizes the privacy and security of our customers.

Following this settlement, CoinDesk requested the public disclosure of the first quarterly report materials submitted by Tether under the Freedom of Information Law (FOIL). Tether previously opposed such disclosure to prevent the public from spreading confidential customer data and sensitive proprietary information—information that could potentially be exploited by malicious actors. After strong objections, Tether withdrew its opposition, allowing CoinDesk and other media access to these documents to demonstrate its commitment to transparency and openness, rather than further futilely defending against various lawsuits.

Compared to two years ago, Tether's market position has changed dramatically. During the major black swan events of 2020 and 2022, Tether proved its market leadership, demonstrating that its reserves possess high-quality liquidity, readily available to support redemptions of any scale. For instance, in 2022, Tether processed $7 billion in redemptions within 48 hours, nearly 10% of its then-reserve amount. This is a great example of our strength in facing stress tests.

Tether's recent confirmation letter clearly outlines the transparency of its lending program. We have consistently upheld our commitment to openness, and there is no new content that needs to be revealed. Tether has never and will never risk compromising the integrity of its reserves. This is evidenced not only by its consistent and unwavering fulfillment of redemption obligations but also by its maximum transparency regarding reserves.

Tether is committed to maintaining the highest standards, as reflected in our ongoing development of risk metrics and risk measurement processes. These robust mechanisms enable our investment and finance teams to thoroughly assess the risks associated with any financial interactions of the company. Tether has a firm understanding of the lending business and regulatory environment and actively works to achieve and maintain its business objectives while adhering to its unwavering risk management culture.

Moreover, our commercial paper consistently maintains an A2 rating or higher. All our past statements have not been modified. We are firmly committed to pursuing accountability and upholding the highest standards.

If the information released is read and understood correctly, the public will see that Tether has proven the legitimacy of its business and the adequacy of its reserves. However, as has often happened with Tether and the entire cryptocurrency industry, information is always deliberately isolated or distorted to attract more clicks.

Tether takes pride in being a leading stablecoin and a force within the community, and we are also proud of the liquidity, stability, and health of our reserves, which have withstood many black swan events that have severely impacted both the cryptocurrency and traditional financial industries. Tether will always protect its customers, employees, and community from attacks.

With the release of this information, Tether hopes to provide a factual reference regarding what the material contains and does not contain.

• The disclosed documents include Tether's statements about banks, showing the complete existence of its banking relationships and reserves. This is as we mentioned in our public disclosures and as evidenced by audits provided by independent third parties.
• These statements show that Tether has been applying the best asset management practices: short-term investments combined with diversification, as clearly seen from the list of investments outlined in various bank bills.
• Since previous media data only provided limited old data (which is now two years old), this material does not represent Tether's current situation. Tether has taken various measures, including reducing its commercial paper holdings to zero in mid-2022 and significantly decreasing its secured loan portfolio, with plans to reduce it to zero in the coming months.

Tether is the first company to disclose its reserve composition and will provide quarterly reserve attestations completed by independent accounting firms. Tether's reserve attestations have evolved over time, providing greater transparency compared to those previously provided to the New York Attorney General's Office. In fact, Tether's latest reserve attestation shows that net profits have reached a new high of $1.48 billion, bringing Tether's reserve surplus to a record $2.44 billion and reducing bank cash deposits by over 90%.

The reserve attestation also shows that Tether continues to commit to reducing its secured loans to zero, which have now decreased from 8.7% to 6.5%, while Tether's holdings of U.S. Treasury securities have also reached a record $53 billion, accounting for over 64% of its total reserves.

Tether is committed to continuing to be a leader in transparency within the cryptocurrency industry, providing information to the community and stakeholders and demonstrating full support to show our commitment to this.

Additionally, Tether regularly collaborates with law enforcement, participating in over 150 investigations across four continents. In the past 18 months alone, Tether has compliantly recovered approximately $200 million in stablecoins at the request of regulators and law enforcement, returning them to their rightful owners.

Finally, Bloomberg, CoinDesk, or any other media organization choosing to disclose this information may have done so either too hastily or without sufficient attention to the current events (facts). We do not endorse this behavior, but our priority is our customers and our ongoing support for the broader cryptocurrency community.

Tether Q&A

Q1: What happened on June 15, 2023?

Earlier this year, Tether fulfilled its reporting obligations to the New York Attorney General's Office as part of the 2021 settlement agreement. This settlement requires Tether to report on its reserves quarterly for two years. Tether has fully complied with this obligation, with no indication that the disclosed information is incomplete or that reserves are insufficient. We are pleased to have completed the obligations of the settlement agreement. Today, Tether is stronger than ever, with a market capitalization at an all-time high.

Shortly after the 2021 settlement agreement was reached, parties such as CoinDesk requested the public disclosure of materials related to Tether's first quarterly report under New York's Freedom of Information Law. On June 15, 2023, the New York Attorney General's Office provided the relevant documents to CoinDesk and others. They provided these documents because Tether decided to withdraw its opposition to the FOIL request.

Q2: Why didn’t Tether/Bitfinex perfect the appeal?

Tether initially filed these lawsuits to prevent the public from spreading confidential customer data and to prevent sensitive business information from being exploited by malicious actors. However, our ongoing and demonstrable commitment to transparency means we must prioritize the public disclosure of information rather than becoming further entangled in time-consuming and unproductive U.S. litigation that distracts the community from addressing real issues.

Q3: If Tether/Bitfinex intended to disclose this information, why wait until now to stop fighting? Why choose this particular time?

At this point in the litigation process, Tether had to decide whether to perfect the appeal. The information made public today is different in sensitivity compared to two years ago, at least regarding Tether's reserves. At this stage, we need to prioritize the public disclosure of information rather than further engaging in time-consuming and unproductive U.S. litigation that distracts us from addressing the actual issues facing the community.

Q4: Does Tether/Bitfinex agree with disclosing customer information to the media?

Absolutely not. Bitfinex and Tether opposed CoinDesk's FOIL request for disclosure because we wanted to prevent customer data from being made public. We urge CoinDesk and others not to publicly share past or current customer names, as this could expose anyone in the community to actual or digital risks.

Q5: Were you forced into this situation?

Not at all. Tether initially filed these lawsuits to prevent the public release of confidential customer data and to prevent sensitive business information from being exploited by malicious actors. We continue to urge CoinDesk and others not to publicly share past or current customer names, as this could expose anyone in the community to actual or digital risks. We could have continued to appeal; however, our ongoing and demonstrable commitment to transparency means we must prioritize the public disclosure of information rather than further consuming time and engaging in unproductive U.S. litigation that distracts the community from addressing real issues.

Q6: Tether has stated that it has no risk exposure to Chinese commercial paper?

That is incorrect. Tether has always refuted rumors regarding its investments in Evergrande. Again, this is completely false, and these disclosures prove that.

Q7: Okay, but why do you have so much risk exposure to Chinese commercial paper?

Tether's risk exposure to Chinese commercial paper is primarily in the banking sector, but all Chinese papers possess good liquidity and are issued by well-known issuers in the international commercial paper market. All of these issuers are stable, and many of the papers are held by some of the world's largest investment managers in conservative portfolios. The ratings of these Chinese bank-related commercial papers are A1 or higher.

Additionally, it is worth noting that Tether reduced its commercial paper holdings to zero last year. Tether has not lost a single penny on any commercial paper, including Chinese commercial paper.

Q8: What role does Bitfinex play in reserve sufficiency?

Bitfinex is a borrower of a secured loan from Tether, which was fully repaid in advance in 2019. This loan mechanism is now closed and will not reopen. As a regular user, Bitfinex is also Tether's preferred choice for purchasing Bitcoin.

Q9: Is the collateral wallet controlled by Tether? Who are the clients providing this collateral? How is the collateral valued?

The collateral wallet is entirely controlled by Tether. Collateral is valued at market prices, and an effective margin call system is implemented. Tether has previously disclosed lending transactions with a portion of large Tether clients in independent third-party assurance statements. All these loans are over-collateralized, and Tether has never lost a penny on these loans, unlike some in the traditional finance industry and elsewhere in the community who engage in "short loans." Tether represents financial freedom and does not disclose the names of its clients to protect their privacy. We urge anyone receiving this information not to publicly share wallet addresses, names, or any other identifiable information that could jeopardize the safety, security, and privacy interests of third parties.

Q10: Were several clients' personal and corporate accounts indeed closed? Should these accounts have been made public?

We regret that these names may be made public by the media, as Tether believes in protecting customer privacy. It is worth noting that if made public, this information would not be disclosed by Tether but rather by the New York Attorney General's Office and the media. We do not wish to comment on any individual relationships, but every customer has passed the rigorous compliance checks and ongoing monitoring required by Tether's compliance policies.

Q11: Okay, if you are so transparent, can you share the documents with us?

No. In consideration of the importance of public information over continuing litigation, we have withdrawn our efforts to block CoinDesk and other media requests. However, this does not mean we will proactively release this information. We still believe that the information in these disclosures could be used to publicly identify customers, including current and future clients. Additionally, our compliance policies could be used to circumvent our controls and undermine our terms of service.

We will not put our customers at risk, nor will we disclose this information to avoid any legal claims.