Stuart Hogner, the general counsel representing the stablecoin company, Tether Ltd and its parent company, Bitfinex, has confirmed that fiat or its equivalent back only 74% of existing USDT.
The lawyer confirmed this in an affidavit submitted today, April 30, in a bid to Show Cause, to Vacate or Modify and stay the Ex Parte Order issued to the crypto firms by the New York State Attorney General on April 24.
After writing extensively about Tether’s fractured banking relationships, Hogner revealed what fraction of Tether’s stablecoin is still backed by fiat and its equivalent. He wrote in the affidavit,
“As of the date I am signing this affidavit, Tether has cash and cash equivalents (short term securities) on hand totaling approximately $2.1 billion, representing approximately 74 percent of the current outstanding tethers.”
Data from Omni Explorer also supports the lawyer’s claim with roughly 2.82 billion USDT currently in circulation. It is also worth noting that Tether adjusted its terms in March to state that it could use assets other than fiat to back the stablecoin issuance.
Tether Must Not Be Held 1:1
Aside from Hogner, Zoe Philips, another Tether lawyer also wrote an affidavit to clarify that Tether is not obligated to hold in reserve $1 for any unit of USDT issued to either Bifinex or any other entity.
Faulting the Attorney General’s belief that Tether’s stablecoin must be backed 1:1, she wrote,
“According to the Attorney General, the line of credit [loan from Tether to Bitfinex] needed to be frozen because it improperly impairs the reserves Tether would use for redemptions. The Attorney General appears to believe that Tether must hold $1 in cash fiat currency for every dollar of tether. These allegations are wrong on multiple levels.”
Moving forward, she claimed that the credit deal worth around $850 million between Tether and Bitfinex was done with the consent of independent counsel from both companies and thus, should not come under scrutiny.
Who Signed the Tether and Bitfinex Loan Deal?
Although both Tether lawyers agree that the deal was done with the consent of independent counsel from both parties, an anonymous Twitter user who is bent on revealing secrets about the agreement noted that the facts are not exactly as the lawyers claim.
Right now, it seems only time will reveal more facts about the Bitfinex-Tether saga with the latest developments suggesting that there could be truths to uncover. The only event that is clear at this point is that the stablecoin is no longer 100% backed by fiat or its equivalent.