Stablecoin issuer Tether has been using a small Bahamas-based bank to hold some of its more than $72 billion reserves, reports the Financial Times.
Tether has historically remained extremely tight-lipped when it comes to revealing where it keeps its assets, but according to people familiar with the matter, the company holds at least some of its funds in the obscure Capital Union bank.
Tether had previously admitted to placing around $15 billion in cash and bonds with another Bahamas-based bank, Deltec Bank & Trust, and that it had “strong banking relationships” with “more than seven, eight banks across the world.”
However, due to its status as a private company, Tether has been able to keep more in-depth information on its partners and the assets that underpin its native USDT token under wraps.
It’s currently not known how much of Tether’s money is held by Capital Union or when it began working with the company.
Tether recently briefly lost its US dollar peg and has seen redemptions totaling around $10 billion, causing some to question the stablecoin’s liquidity.
However, earlier this month, chief technology officer Paolo Ardoino reassured users that there was nothing to worry about and that it was coping with the redemptions just fine.
Tether’s reserves are the problem once again
Tether has previously found itself in hot water over its reserves. Last year the company was fined $41 million by the Commodity Futures Trading Commission (CFTC) for claiming that USDT was backed wholly by corresponding fiat currency.
The CFTC also said that Tether failed to reveal that it included unsecured receivables and non-fiat assets as part of its reserves. It also lied to investors, telling them that it would carry out regular audits to prove it maintained 100% of reserves at all times. However, its reserves were not audited.