Tether touts profits and new ‘compliance’ plan, loses transaction war with USDC

Tether can’t stop boasting about its profits, despite growing calls for a crackdown by US law enforcement on the world’s largest stablecoin.

On May 1st, Tether latest certificate The fiscal reserves are said to back approximately $104 billion of USDT in circulation at the end of the first quarter of 2024 (currently more than $110 billion). Tether claims to have enjoyed “record profits” of more than $4.5 billion in the first three months of this year, but as usual, the devil lies in the sparse details Tether is willing to release to the public. is lurking.

We would like to remind you that this certification, carried out as usual by BDO Italia, is based solely on data provided by Tether, which claims to be accurate as of March 31, not the day before or the next day.Take it for what it’s worth, but what is it? it’s not is a professional third-party audit, something Tether has promised (and failed to deliver) for years.

And if you ever doubt that Tether only hires the absolute brightest and brightest to carry out the “Trust me, we’re fine” proof, Tether The original version of the company’s first quarter report Lots of typos and grammatical errors. If that’s the meticulous attention to detail that BDO Italia is bringing to the table, and the Tether admins are ignoring/forgetting that proof, here’s what we can say: Hehehe!

Anyway, let’s get back to the numbers. Of the $104 billion in assets backing USDT, the majority ($74 billion) is said to be held in U.S. Treasury bills, the amount listed in Tether’s Q4 2023 certificate. $11 billion more than that. The high interest rates offered by these Treasury bills reportedly
Managed by Wall Street giant Cantor Fitzgerald (Nasdaq: ZCFITX), they are primarily responsible for Tether’s claimed profits.

Additionally, the alleged profits came through BTC tokens that Tether claims to hold for investment purposes, with the legal value of these tokens increasing from $2.8 billion on December 31, 2023 to $2.8 billion at the end of the first quarter. rose to nearly $5.4 billion. Although Tether does not disclose the number of tokens it holds, the nearly doubling in dollar terms largely reflects the value bubble that BTC (until recently) enjoyed this year.

Tether has not yet made much progress in reducing the value of its “secured loans,” which totaled $4.73 billion at the end of the first quarter, down by only about $65 million from the previous quarter. At this rate, Tether will one day make good on its promise made two years ago to wipe these loans off its balance sheet, oh well, never.

Tether is using its profits to splurge on outside investments, including a 200 million majority stake in BlackRock Neurotech, a “world pioneer in brain-computer interface (BCI) technology.” Also includes dollars. (Please note that this Utah-based company has nothing to do with Wall Street’s BlackRock fame.)

Another important news for Tether recently is the launch of USDT on the open network.
(TON) is a blockchain integrated with the Telegram encrypted instant messaging service.
Telegram, originally developed in Russia and based in Dubai, has around 900 million users around the world and is praised for allowing dissidents to bypass censorship but criticized for acting as a conduit for Kremlin propaganda. ing.

What makes USDT-on-TON unique is Telegram’s ability to provide a statutory on-ramp with an off-ramp to bank cards/accounts in the pipeline. Despite only being launched a few weeks ago, TON already has nearly $95 million of his USDT outstanding. Users based in Asia It currently accounts for the largest portion of Telegram’s user base (38%), followed by Europe (27%) and Latin America (21%).

Issues regarding capital (USD)T

Despite the rosy profits, Tether still fails to buy favorable media coverage that downplays its ties to crime. For example, Reuters reported last month on Venezuela’s continued efforts. Sell ​​oil using USDT We can’t do that using US dollars because of economic sanctions.

Venezuela’s state oil company PDVSA has been using USDT to circumvent US sanctions for some time now, but the country’s oil minister, Pedro Telechea, told Reuters that digital assets like USDT could be used by some traders. It is becoming the “preferred payment method,” he said.

As one trader noted last October, this poses risks for those buying Venezuelan crude. “USDT trading does not go through the trader’s compliance department, as required by PDVSA, so the only way to make it work is to work with an intermediary.”

Last December, Tether updated its terms of service to add Venezuela to its list of prohibited markets, while working with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) to link individuals who are OFAC’s Specially Designated Nationals (SDN). The bank claimed that it would freeze the wallets that were stolen. )list. However, Tether’s actions have been largely reactive and inefficient, leaving it unable to close the door long after the USDT tokens have escaped these digital barns.

April 28, Reuters report Chinese companies looking to do business with OFAC-approved Russians are increasingly turning to digital assets to circumvent barriers erected by traditional financial institutions.Tether is not mentioned in the report, but on April 1st Wall Street Journal report “Tether has become essential to President Vladimir Putin’s war machine.”

look! compliance! seriously!

On April 30th, Binance founder Changpeng “CZ” Chao was sentenced to four months in prison for violating U.S. anti-money laundering laws, making it difficult for anyone to receive such lenient treatment. sparked all kinds of speculation about who blamed CZ. Considering the dominance of USDT on Binance before FDUSD, Tether has a large presence in this “cryptocurrency dead pool”.

To make matters worse, the U.S. Department of Justice (DOJ) announced: superseding indictment May 2nd, about a person believed to be a member of the famous Cartier family and five Colombians. This unlikely gangster is accused of “conspiring to launder money based on his alleged participation in a network that laundered millions of dollars in Tether comprising the proceeds of drug trafficking from the United States to Colombia.” There is. Oops.

Apparently feeling the heat, tether issued announcement On the same day, it also announced a new collaboration with blockchain data analyst Chainaracy to “develop customizable solutions to monitor secondary market activity.” Tether claims this provides new insight into the use of USDT “beyond the limited entities that buy and sell USDT directly from Tether.”

Tether gave no indication when this new surveillance mechanism would be implemented or whether it would be freely accessible to U.S. law enforcement, which Tether claimed it “introduced” last December.In any case, we hope Tether brings greater results
Progress on this front is less likely than a commitment to conduct appropriate third-party audits. Because that ship will never come in.

Chainalysis is Similar partnership with Binance “Tackling global virtual currency money laundering” dates back to 2018. What happened again?

Sit down now and write yourself a letter

On the same day that the Reuters China/Russia report was released, U.S. Sens. Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kansas) letter It was addressed to a number of Biden’s cabinet members, including the secretaries of the Department of Defense and Treasury, Jake Sullivan, national security adviser, and the undersecretary of the Treasury for terrorism and financial intelligence.

The letter cites the Journal’s report and how “rogue states including Russia, Iran, and North Korea are relying on cryptocurrencies to evade sanctions.” The letter warned recipients that “Tether has become the cryptocurrency of choice for sanctions evaders and other bad actors,” but also warned recipients of “the potential needs needed to neutralize this threat.” “Certain additional privileges.”

Warren has written a number of letters about these “cryptocurrency crackdowns” – she published: one more And she and Mr. Marshall have worked together on legislation that would strengthen anti-money laundering and anti-terrorist financing requirements for digital asset companies.

But the Senate Banking Committee, which Warren serves on, recently gave a mixed response to the Treasury Department’s plea for additional tools to combat Tether, with most of the backlash pointing to the Biden administration’s request for more tools to combat Tether. This came from Republicans who were wary of giving the power to the government.

In any case, multiple bills regulating stablecoins are being debated this Congress, all of which are far more welcoming to USDC Issuer Circle, Tether’s closest rival in the stablecoin game. be. Circle and Coinbase (Nasdaq: Coin) exchange (Circle’s USDC partner) has begun urging Congress to take action against Tether, targeting Cantor Fitzgerald, the alleged custodian of Tether’s alleged T-bills.

90% of stablecoin transactions are bots

USDC suffered a crisis of confidence in spring 2023, when $3.3 billion in reserve assets were nearly wiped out. USDC’s market capitalization quickly fell below $24 billion, but has since recovered to some extent and is now comfortably above $33 billion (still well above its peak of $56 billion in mid-2022). .

Major credit card company Visa (NASDAQ:V) recently We have released a new tool The results showed that USDC outperformed USDT in terms of monthly stablecoin transactions. There were approximately 167 million USDC transactions in April, approximately 3 million more than USDT.

This happened despite USDT being used in 34.2 million unique wallets compared to USDC’s 9.6 million wallets.
There is also the fact that USDT accounts for more than two-thirds of the total stablecoin market capitalization.

But a far more interesting statistic is that the company’s new analytical tools show that only 1,000 trades initiated in the past 30 years with trade volumes of more than $10 million show clear signs of being generated by a “bot.” This comes from Visa’s revelation that it is possible to segregate accounts (e.g., personal accounts). day to day.
Applying that filter, total stablecoin transfers in April Decrease from $2.65 trillion to $265 billion. In other words, 90% of stablecoin transactions are not initiated by humans.

Visa’s new tool only monitors on-chain transactions, but many of the bot-driven stablecoin transactions are intended to give the impression of increased consumer interest in this or that token. Since it’s a wash trade on an exchange, unsuspecting retail idiots will rush in with fiat currency and someone else. Those with large bags can use these rubles as exit liquidity. Never change the “cipher”.

See: The Web3 World with Teranode and Edge-to-Edge Electronic Value Systems

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