Tether Lawyer Admits That USDT Is Only about 74% Backed by Fiat Equivalents

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Stablecoin USDT is only 74% secured by Fiat and its equivalents, Crypto News tweeted with reference to General Counsel to Tether and  Bitfinex, Stuart Hoegner.

On Tuesday, Hoegner gave written testimony in which he noted that the company has $2.1 billion in Fiat and non-Fiat assets, and admitted that the USDT is currently not fully secured.

“As of the date [April 30] 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.” he wrote. 

According to CoinMarketCap, the current USDT issue of tokens exceeds 2.8 billion.

Another representative of Tether – Zoe Phillips from the law firm Morgan Lewis – in a legal memorandum in support of the statements of the respondent indicated that Tether does not have $1 for each issued USDT.

“According to the Attorney General, the line of credit 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,” she wrote.

Hoegner also stated that the Bitfinex loan agreement was concluded to “protect the virtual currency market”.

“Tether and holders of USDT have a keen interest in ensuring that one of the dominant trading platforms of tethers has sufficient liquidity for normal operations,” he wrote, adding that the disruption of Bitfinex could have a negative impact on Tether itself.

Read Hoegner’s full affidavit: HERE.

Featured image via Pixabay