The documents from the 2021 investigations against the USDT issuer by the federal Commodity Futures Trading Commission and the New York Attorney General reveal the ownership structure of the shrouded company behind the largest stablecoin in the world, which was previously undisclosed.
The USDT stablecoin from the company is a crucial component of the cryptocurrency industry’s infrastructure, facilitating the flow of money. Yet its creators haven’t always been open about their business practices.
In addition, Christopher Harborne, a businessman with British and Thai nationality, controls about 13% of the company’s shares. Together, the four own about 86% of Tether through their own holdings and another related company.
Investors’ worries are reportedly fueled in part by the fact that the company makes loans via USDT, according to WSJ. It lent USDT to organizations who agreed to exchange them for $1 apiece, as opposed to trading one USDT for another currency worth $1. The company wouldn’t be able to exchange all of the USDTs in circulation for dollars if borrowers are unable to repay their debts.
The company claims that the high level of collateral on its loans makes them secure. The court-appointed examiner’s final report on the bankruptcy of cryptocurrency lender Celsius illustrates how challenging that would be to handle.
According to the article, Tether gave $1.8 billion in USDT to Celsius in May 2021, with the loan being secured by $2.6 billion in cryptocurrency. As the price of cryptocurrencies dropped, it had to manage the loan’s risk. When the debt was eventually repaid, Celsius lost funds. The report stated that in addition to lending to Celsius, Tether also received loans from the firm that were double its credit limit while holding 7.73% of its equity. But after that, the company spoke out to deny the news.
After the article was published, the CTO Paolo Aordino called the article a “clown” in a tweet, adding that people understand that the company stands for freedom and tolerance.
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