(Bloomberg) -- Tether Holdings Ltd. once counted securities issued by Chinese companies among the reserves backing its USDT stablecoin, the world’s largest, documents released by New York’s Attorney General show. 

Speculation that Tether had exposure to Chinese commercial paper had followed the stablecoin issuer for years. A Bloomberg investigation published in October 2021 found evidence that Tether’s reserves did in fact include billions of dollars of short-term loans to Chinese companies, as well as a sizable loan to crypto platform Celsius Network. At the time, Tether denied having any exposure to the crisis-hit China Evergrande Group’s debt but declined to say whether it held securities of other Chinese companies or issuers. 

The quality of assets backing USDT has long been the subject of scrutiny because of the crucial role it plays in crypto markets. Traders use the stablecoin, which has a circulation of about $83.5 billion, to move money into and out of cryptocurrency markets, swap funds between exchanges and as a haven in times of high volatility. Should Tether be unable to redeem the tokens for dollars, confidence in cryptoassets would be shaken. 

Tether, which in February 2021 reached a settlement with the NY AG’s office over allegations that it lied about its reserves and hid losses, provided letters, banks accounts, reserve holdings and wallet addresses through the law firm Steptoe. The documents, which list Tether’s assets as of March 31, 2021 and were handed over to the NY AG, also detailed procedures for detecting money laundering.

The NY AG released the documents in response to a freedom of information request from Bloomberg News, following an earlier request by crypto publication CoinDesk. 

“Tether is in a completely different position compared to 2 years ago,” the company said in a blog post Friday. “It demonstrated, leading the industry during the biggest black swan events in 2020 and 2022, that its reserves are extremely liquid, of high quality and ready to be made available to support any size of redemption.”   

Tether said in July last year that it held no Chinese commercial paper at that point. It also said its total commercial paper holdings had dropped to $3.7 billion, and that it planned to reduce the position to zero within a few months. 

According to the documents released by the NY AG, Tether at one point held securities issued by major state-owned Chinese companies including Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Agricultural Bank of China Ltd. The documents that list the individual securities don’t display at which point Tether held them. The securities matured in 2020 or 2021. 

Tether also held securities issued by companies ranging from Deutsche Bank AG to Barclays Bank Plc and ArcelorMittal SA, according to the documents. 

Stablecoin issuers like Tether say their tokens are backed on a one-to-one basis with primarily cash and cash-equivalents to maintain their pegs with assets like the US dollar. There are also stablecoins that rely on other mechanisms, though they are much less widely used than USDT and the second-biggest token, USDC. 

Countering Rumors

Documents detailing Tether’s banking relationships, lending, and investments made through reserve assets as of the end of March 2021 also showed that the USDT issuer had made significant loans to third parties, and highlighted accounts held at several different Bahamian banks. 

Read more: Tether Deviates From Dollar Peg as Market Mismatches 

In the tumultuous summer of 2022, as crypto markets cratered in the wake of algorithmic stablecoin TerraUSD’s collapse, Tether found itself once again having to counter speculation about its reserves. 

In mid-June that year, as crypto firms including Celsius were failing, Tether issued a blog post in which it described as “completely false” rumours that “its commercial paper portfolio is 85% backed by Chinese or Asian commercial papers and being traded at a 30% discount.” The blog post further said that the “Celsius position has been liquidated with no losses to Tether.” 

Below are some of the key facts about Tether outlined in the documents:


According to the documents, Tether maintained bank accounts at Deltec Bank & Trust, Ansbacher (Bahamas) Limited, Capital Union Bank and Far Eastern International Bank for assets backing USDT as of March 31, 2021. The documents include portfolio reports for some of the accounts. 

Tether also held reserve assets in funds at Bradbury Investment as well as the Metis GY Harvesting Fund. In addition, it had US dollars and Bitcoin deposited on Bitfinex, the crypto exchange with which it has an affiliation. Tether also held more than $2 billion worth of reserves in gold storage as of March 31, 2021. 

For corporate operational accounts, Bitfinex and Tether used Deltec and Far Eastern International Bank. Neither Bitfinex nor Tether used reserve funds for operational purposes, Tether’s lawyer wrote. Only two people at Tether — the chief financial officer and the chief investment officer — had authority to move profits from the reserve account into the operating account, the lawyer wrote. 


Tether issued loans in USDT to third parties. Its lending program reached $5.1 billion and had fewer than 30 borrowers as of March 31, 2021, the documents show. 

The loans were secured with collateral in the form of digital assets, such as Bitcoin or Ether, or securities. 

Tether’s lending program was sizable in the crypto space. In comparison, Genesis Global Capital, then one of the largest lenders in the digital asset space, reported $9 billion total active loans as of March 2021. 

The document also mentioned that Tether made a loan to Bitfinex, which repaid the full principal on Jan 13, 2021. Bitfinex borrowed more than $600 million from Tether in 2018, a transaction made public later in 2019 when the NY AG alleged the exchange lost $850 million in customer and corporate funds to payment processor Crypto Capital Corp.

--With assistance from Anna Irrera, Sidhartha Shukla and Dave Liedtka.

(The 16th paragraph was corrected to show Tether invested in the Metis GY Harvesting Fund. The story was originally published on June 16.)

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