Tether Reduces Commercial Paper Holdings to $24B

The New York Attorney General (NYAG) alleged that Tether and Bitfinex, the sister company have attempted to cover the loss of around 850 million USD in customer funds. Thereby, as part of an $18.5 million court settlement with the NYAG Office, Tether is legally required to disclose its quarterly reserves from February last year. 

In 2017-18, Tether was accused of misrepresenting the precise amount of fiat backing USDT. The recent attestation conducted by Cayman Islands-based Accountants MHA Cayman claimed to take Tether as a client in 2022. 

Outside accounting firms complete attestations to corroborate a company's statements, in this example, Tether's reserves report of its stablecoins. A subsidiary of MHA MacIntyre Hudson, MHA Cayman is a mid-tier organization based in the United Kingdom that has recently been on the radar of the Financial Reporting Council for audits issued in 2018-19.

According to the study, Tether's 'consolidated assets surpass its consolidated liabilities,' which refers to MHA Cayman discovering Tether’s reserves exceeding the amount necessary to redeem the digital asset tokens issued. Although the difference is small, with total assets totaling $78.67 billion and liabilities being roughly $78.53 billion.

Tether’s reserves have changed dramatically since its previous report in late September. The cash and bank deposits fell 42 percent to approximately $4 billion; while holdings of money market funds surged 200 percent to $3 billion and treasury bills increased 77.6 percent to about $34.52 billion. 

The considerable quantity of commercial paper underlying Tether's reserves — 65.39 percent as of May 2021 — has attracted criticism from observers who have questioned the paper's origins and its legitimacy as an investment.

Last year, concerns were about Tether being exposed to the Evergrande crisis through commercial paper holding, however, Tether denied these claims. Generally, large firms frequently issue commercial paper, which is used to fund the payroll as well as short-term liabilities. This typically explains an unsecured debt not backed by any form of collateral.

As per Tether’s attestation, $13.93 billion of its commercial paper has a maturation window of 0 to 90 days, $9.94 billion has a maturation window of 91 to 180 days, and $823 million has a maturation window of 181 to 365 days. A commercial paper with a maturation window of more than 270 days is required to be registered with the U.S. Securities and Exchange Commission.