According to information released by the New York Attorney General (NYAG), Tether, the issuer of leading stablecoin USDT, reportedly deactivated around 29 accounts tied to significant players in the cryptocurrency sphere in 2021.
While reasons for the individual account terminations remain undisclosed, the named entities included MoonPay, BlockFi, CMS Holdings, and Galois Capital.
Responding to the unfolding situation, Tether indicated its reluctance to comment on specific customer relationships, noting that each party had undergone stringent compliance checks both during onboarding and throughout their relationship, in line with Tether's compliance policies.
NYAG Investigation and Tether's Commitment to TransparencyWhile the NYAG investigation wrapped up in early 2021, some of the documents in question extend until June of that year. These documents were collected during the NYAG's probe into Tether and sister company Bitfinex over the alleged misappropriation of $850 million. During this investigation, iFinex, the parent company of both entities, requested an extension to produce the required financial documents.
Following a settlement that included an $18.5 million penalty and the cessation of trading in New York, media outlets and Coinbase sought the public disclosure of Tether’s initial quarterly report under the Freedom of Information Act. However, Tether opposed this motion, citing the need to protect its customers' confidential data.
Despite Tether's objections, the NYAG granted media outlets access to the documents, leading to the revelation about the deacttivation of numerous company accounts.
Tether's Stance on Transparency and Risk ManagementTether remains adamant about its commitment to transparency while prioritizing its customers' privacy and security. Following the settlement with the NYAG, Tether has diligently completed its quarterly reporting obligations, affirming its commitment to openness and transparency.
Notably, Tether claims that it takes pride in its meticulous development of risk metrics and processes, enabling its investment and financial teams to thoroughly assess the risk tied to the company's financial interactions. Tether has continually demonstrated its commitment to sustaining its business objectives while adhering to a robust risk management culture.
Tether's Reserves and Commercial PapersTether's dedication to maintaining the highest standards is evident in its transparent dealings regarding its lending program and reserves. Tether's reserves have proven to be extremely liquid, high-quality, and readily available to support any size of redemption, demonstrated by the repayment of US$7 billion in 48 hours in 2022.
According to the released documents, Tether has consistently maintained an A2 or better rating for the majority of its commercial papers, and none of its past statements have undergone any changes. This commitment to upholding the highest standards has been echoed in the company's dedication to accountability and its unwavering risk management culture. The firm, however, has been severely criticized over past decisions, especially in the case of blocking an MEV Validator as a security response.
Tether says that while media outlets have rushed to present this information to readers, Tether remains committed to its users, as well as for the benefit of the the broader crypto community. The company is keen to provide a factual point of reference about the disclosed materials, and it continues to cooperate with law enforcement, having assisted in over 150 investigations across four continents in the past 18 months.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
