The stablecoin operator said the reliability of its reserves is important to highlight “at a time like this.” Tether has historically had issues with transparency.
Tether issued a short statement on Nov. 16 saying that it has no exposure to institutional crypto lender Genesis Global or the Gemini Earn program after the announcement that Genesis Global and the Gemini exchange were freezing withdrawals. Genesis Global is the lending partner for interest-bearing Gemini Earn.
Eager to differentiate itself from contagion-stricken crypto organizations, Tether said:
“It is important at a time like this to highlight that these [Tether’s] reserves have proved tried and true demonstrating consistent resilience during the black swan events that have characterized the market this past year.”
Tether, the operator of USDT (USDT) — the largest stablecoin and the third-largest digital currency by market capitalization — lost its dollar peg for a short while on May 12, at the beginning of the crypto market meltdown.
Tether said that the Nov. 16 announcement was “part of Tether’s ongoing efforts to increase transparency.” Tether has resisted efforts to make it prove the backing of its stablecoin, losing in February a case brought by the Office of the New York Attorney General in 2019 to expose that information. In July, Tether hired BDO Italia to conduct monthly reviews and attestations of its reserves for public release as part of the settlement of that case.
Tether Confirms Zero Exposure To Genesishttps://t.co/KHEx2HWoJ1
— Tether (@Tether_to) November 16, 2022
The stablecoin has made its reduction in commercial paper in its reserves to zero quite public throughout the year.
Genesis Global announced via a tweet on Nov. 16 that it was temporarily suspending redemptions and new loans due to the “market turmoil” arising from the collapse of FTX. After Genesis Global’s announcement, Gemini said it would be unable to meet customer redemptions for five days.
The collapse of the FTX exchange has sent new waves of distress through crypto markets that may continue to be felt for months to come.