Tether, the largest stablecoin by market capitalization, was back in the spotlight today. Yes, it caused fear and panic once again. However, according to recent announcements, the company took a significant step to dispel FUD (fear, uncertainty, and doubt). The timing is notable, but the documents could provide some relief to the market.
Tether has fulfilled its reporting obligations to the New York Attorney General's Office under the terms of the 2021 agreement. This agreement required Tether to report on its reserves every quarter for a period of two years. Tether announced that it has fulfilled this obligation.
"Tether has fully complied with this obligation, and there has been no suggestion of statements being incomplete or reserves being insufficient. We are pleased to have fulfilled our obligations under the agreement. Today, Tether is stronger than ever with the largest market capitalization in history. Shortly after the settlement in 2021, CoinDesk requested the release of materials related to Tether's first quarterly reports under New York's Freedom of Information Law. This morning, the New York Attorney General's Office provided CoinDesk with documents in response."
Tether has announced that it did not publish the documents to prevent the disclosure of confidential customer data and the potential misuse of sensitive commercial information.
"However, our ongoing and demonstrable commitment to transparency means that we prioritize clarity over lengthy and inefficient American legal proceedings that distract from the real issues facing our community."
Is the Tether FUD Over?
According to today's announcement, there are no issues with the reserves, and the prosecutors did not raise any concerns. So, for now, it seems like the FUD has been resolved without further escalation. The only remaining concern is whether the company will comply with future stablecoin regulations. If there is indeed a 103% reserve as stated by the BDO attestations, there won't be much reason for fear in the upcoming process.
Tether stated the following:
"Among the disclosed documents are statements that demonstrate the full existence of our reserves, as evidenced by publicly disclosed, independent, third-party assurance attestations from Tether's banks. Furthermore, the statements demonstrate how Tether applies best-in-class asset management concepts: short-term investments and diversification, clearly visible from the various investments listed in the bank statements. Much has been made by our biggest detractors about the solidity and accuracy of Tether's backing. Therefore, these materials should debunk all of this baseless FUD. Additionally, the materials in question are outdated and do not accurately reflect the current state of our reserves or account for transformative changes in our ecosystem. Tether has, among other actions, reduced commercial paper assets to zero by mid-2022 and substantially decreased the secured loan portfolio to bring it to zero in the coming months."
Today, both DeFi and centralized exchanges experienced a significant selling pressure on USDT. The timing of the FUD wave on the day the documents were delivered demonstrates the significance of timing in this matter.
