Tether Denies Holding Commercial Paper Issued by Troubled Real Estate Tether has amply demonstrated, most recently through assurance opinions from [auditor] Moore Cayman, that all issued tethers are, in fact, fully reserved, he added. Its flagship unit, Evergrande Real Estate Group, had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020,. According to the attorney-generals investigation, there were instances when Tether was not fully backed in the past. "It's impossible to reach these levels of success in such a short time without genuine organic interest and really wide demand from the broader crypto trading industry," Paolo Ardoino, Tether's chief technology officer, told Insider in a recent interview. Evergrande's main unit had 205.7 billion yuan ($32 billion) worth of commercial paper at the end of 2020, filings show. Concerns intensified after Evergrande admitted in June it did not pay some commercial paper on time, and news in July a Chinese court froze a $20 million bank deposit held by the firm on the . Tether, Bitcoin and Chinese Commercial Paper at Scale - CoinDesk Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. In early 2021, Tether paid a fine of $18.5 million to settle a case with the New York Attorney General. Such holdings of companies short-term debt would make it the seventh largest in the world. Evergrande, which has total liabilities of more than $300 billion, is also in the spotlight as it scrambles to raise funds, teetering between a messy meltdown with . His role is much broader than tech chief. Tether operates a so-called stablecoin, which it says is backed one-for-one by dollar assets. About half of Tether's roughly $75 billion in assets, which back USDT, is in commercial paper. Elon Musks Twitter is dying a slow and tedious death. Sign up for free newsletters and get more CNBC delivered to your inbox. Can it be liquidated to meet redemptions? It seems increasingly likely that Evergrande is fated instead for the glue factory. About half of Tethers roughly $75 billion in assets, which back USDT, is in commercial paper. Approximately half of Tethers $62.8 billion assets as of the end of June 2021, were backed by commercial paper and certificates of deposit, according to the company. The downgrade notice was sent to Evergrande on Sept. 15 from China Chengxin International. Probing the intersection of crypto and government. madcap@cnbc.com. "Tether has maintained its stability . "Tether said they have no Evergrande exposure," Cramer acknowledged. Tether says it doesn't hold any commercial paper issued by Evergrande "I think that it's a little bit aggressive, or cocky, to ask that everyone in the world use US agencies, or US auditing companies - otherwise it does not matter, or is not fine," he said. The company is currently under investigation by multiple law enforcement agencies, including the U.S. Department of Justice and the Federal Bureau of Investigation. Tether's commercial paper disclosure places it among global giants For Ardoino and the team, this highlights the crypto community's faith in Tether. So while Evergrande may not be on the books, the concern is that the commercial paper may be from other real estate firms. Or perhaps there are other ways to explain things. The information on this website is subject to change without notice. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. Stablecoins are rarely on the tips of investors' tongues when it comes to talking about the volatility-filled headline-grabbing crypto market. The transformation of value in the digital age. That has included harshly curtailing apparently successful fintech firms like Ant Group and, most recently, instituting restrictions on video games, which cant be good for Tencent and other firms. read more. "We are working with an amazing counterparty that is extremely professional and has a deep knowledge of traditional finance and also crypto markets and the blockchain industry and so on. Ardoino clarified that Tether does not hold Evergrande's commercial paper. Analysis: Goldman Sachs faces hard sell for its consumer assets, Ex-Goldman banker Ng deserves 15 years in prison, US prosecutors say, Reporting by Alun John This is not the first time concerns about the true value of USDT have emerged. But is it bad? The "Mad Money" host said the struggles of Chinese developer Evergrande are likely to keep weighing on crypto markets. The Chinese real-estate giant is facing down $300 billion in debt that it cant pay back. Lab leak theory: 3 years on, will we ever know where COVID came from? Among other signs of serious mismanagement, customers have made large deposits on Evergrande apartments that were never built. Tether, Bitcoin and Chinese Commercial Paper at Scale Webinars Indices Markets Finance Technology Web3 Policy Sponsored Content Upcoming event Yuga Labs, Google and More TV & Videos TV & Videos. These frauds even show some sign of being tacitly approved by the Chinese government, to the extent that they have targeted investors abroad. ConsenSys to Launch zkEVM Testnet as Battle for ZK Supremacy Heats Up, Binance Continues to Battle FUD as US Senators Go After Balance Sheets, Coinbase Moves Into More Stable World of Asset Management with Latest Acquisition, EOS Pumps 10% Amid Broader Market Correction due to EVM Speculation. Well send you a myFT Daily Digest email rounding up the latest Cryptocurrencies news every morning. Contact - Tether The stablecoin issuer Tether this week declared that it doesnt hold short-term debt issued by troubled Chinese real estate developer Evergrande. According to the Financial Times, this makes Tether one of the world's largest investors in the US commercial paper market. Thus, it has grown 19-fold in a matter of two dozen months. Tether Owns Billions In Chinese Debt: Bloomberg Report As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. In the NYAG investigation, the company was found to be conducting illegal activities in New York. Tether said that it funnelled roughly half its reserves into commercial paper. A report from the end of 2020 shows that Evergrande has just around 10% of the money owed. Many stablecoin companies have followed Tether's lead both with attestation and the use of commercial paper. To counteract that line of questioning, Tether secured attestations on its financial statements - a review from an independent accountant, rather than a full audit - on the reserves. "We are always working with regulators and we are expecting additional or proper regulations coming in the next few months, to one year," Ardoino said. Your Use of the Site. "I know the crypto-lovers never want to hear me say sell, but if you've got a big gain as I did, well, I'm begging you to," the "Mad Money" host said. The tumble appears to have been triggered by the mounting problems at embattled property giant China. Evergrande is the biggest issuer of commercial paper in the Chinese real estate market, according to Reuters. That marks a significant decrease in commercial paper, from $24 billion to $20 billion in the first quarter of 2022. Tether to Cut Commercial Paper Holdings to Less Than $4 Billion Crypto markets took a dip Thursday just around the time it was reported that Chinas Evergrande Group was on the verge of defaulting on a bond payment. Is Evergrande's Fall Influencing the Depeg Issue for Tether? By signing up, you will receive emails about CoinDesk products and you agree to ourterms & conditionsandprivacy policy. Evergrande is trying to find a way to cut costs and sell off some of its assets to dig its way out. Our Standards: The Thomson Reuters Trust Principles. Neither Tether nor Bitfinex admitted wrongdoing. The $1.1tn commercial paper market is vital for large companies looking to raise cash for short-term needs such as payroll and inventories. The Evergrande Group is the second-largest property developer in China by sales. What financial advisors need to know about crypto. Regardless of what commercial paper you hold, bonds and commercial paper would take a hit and some issuers may even fold," tweeted Adam Cochran, partner at Cinneamhain Ventures. Sell some, stay long the rest, then let's wait and see if China changes its attitude toward an Evergrande bailout.". "So if you own crypto in any form and you've got big gains, I recommend taking something off the table.". Hit him up! Tether had stated since its launch in 2014 that its tokens were fully backed by US dollars in bank accounts, before pivoting in February 2019 to say that its reserves included traditional currency, cash equivalents and other assets and receivables. The most recent attestation states the average credit rating of its commercial paper holdings is "A-1" - an investment grade based on the ratings scale of Moody's Investor Services, a ratings agency. Now onto the crypto context, if you have not guess it already, Tether's USDT that tracks the value of the US dollar is backed by a significant amount of Chinese commercial paper. Since Evergrande's potential collapse could have broad implications for the commercial paper market and Tether's most recent attestation contains no breakdown of either the geographical exposure or investment category of the paper it holds, market participants are concerned about the risks to Tether's books. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. It is also alleged that Tether also owns commercial paper issued by Evergrande, China's second-largest real estate developer, which is itself experiencing a major liquidity crisis. Evergrande, China's second-largest property developer, is to blame. A stock exchange filing added that Evergrande was added to a watch list for possible further downgrades in the future. BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back. The latest moves in crypto markets, in context. After a couple of decades of relative freedom for entrepreneurs (including, as mentioned, the apparent freedom to commit securities fraud), Chinese leadership under Xi Jinping has begun to aggressively intervene in markets. Evergrande and China's Looming Risk to Tether - CoinDesk Approximately half of Tether's $62.8 billion assets as of the end of June 2021, were backed by commercial paper and certificates of deposit, according to the company. They are, in theory, backed by reserves, such as short-term government bonds and the currency itself. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information. As demand for tether grew, market participants started to question whether that was the case. clarified that Tether does not hold Evergrande's commercial paper. This story was seen first on BeInCrypto Join our Telegram Group and get trading signals, a free trading course and more stories like this on BeInCrypto, Ukraine Latest: Russia Continues Efforts to Encircle Bakhmut, INSIGHT-Before fatal collapse, Turkish building had skirted code thanks to Erdogan policy, In Chicago, adapting electric buses to winters challenges, Ukraine ally Kallas fights for reelection in Estonia vote, Global race to boost electric vehicle range in cold weather. In addition to being a major real estate developer, Evergrande is also China's largest issuer of commercial paper (very short-term corporate bonds). Tether Claims to Hold no Commercial Paper From Struggling Evergrande But tether's growth of around 3,350% since early 2019 is seen as reason to celebrate. Even the chance to speak to Ardoino is rare. Is the Evergrande crisis pushing Bitcoin, Tether markets on - AMBCrypto Perhaps, if one were to scale tether on a different Y-axis like so: Perhaps the tail wags the dog. Hoegner said the commercial paper reserves included amounts held internationally with further sub-custody at major global institutions. But it could still take Tether with it, depending on whats actually in that stablecoin sandwich. The downgrade from A to AA applies both to the bonds and their issuer rating. In May, it provided a breakdown of these reserves, which Tether claims included just under $30bn in commercial paper, a short-dated investment similar to cash. Head to consensus.coindesk.com to register and buy your pass now. However, as Tethers reserve holdings have been questioned by regulators such as the New York attorney-general in the past, providing banking services to Tether will likely raise reputational risk concerns, wrote the JPMorgan analysts. To a fair extent, staying in the same playing field as Evergrande makes Tether susceptible to the domino effect. Evergrande, which has total liabilities of more than $300 billion, is also in the spotlight as it scrambles to raise funds, teetering between a messy meltdown with far-reaching impacts, a managed collapse or a government bailout. The biggest crypto news and ideas of the day. We are completely confident.". That type of heavy-handed control is at the core of Chinas conundrum as an authoritarian state trying to reap the rewards of capitalism. While the embattled housing giant ultimately made its scheduled payment of $148 million, questions persist about the long-term prospects for it and other real estate developers in China. Understanding the magnitude of size and growth of USDT, bitcoin and Chinese commercial paper may help give some perspective to the latest headlines. Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram, Questions, comments, suggestions for the "Mad Money" website? Given Tethers record to this point, that may take a while. All Rights Reserved. "An industry is not an industry if there is only one player, instead having many players with different offerings with different use cases is really helpful in a moment when you have to talk with the regulator," Ardoino said. Last March, the Federal Reserve stepped in to buy commercial paper as the pandemic led money market funds, one of the biggest buyers, to pull back. Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Markets cant function without transparent information flows, full stop. Overall, the studio has a watchful eye. Tether has been beset by transparency concerns in the past as well. As part of that settlement, Tether received a $18.5 million fine, agreed to no longer operate in New York and pledged to provide quarterly reports on its reserves for the next two years. The US Treasury is expected to release an in-depth report on stablecoins any day now. Though its main product since its founding in the 1990s has been housing, Evergrande has grown into a huge conglomerate with products ranging from bottled water to electric cars to a soccer team. More Articles Evergrande has now had to suspend trading of that unit's onshore corporate bonds following a downgrade, another red flag pointing towards an impending default. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. Tether is completely unbacked USD that gives these exchanges the liquidity they need to market make derivatives that have non-linear . How much of it is Chinese or specifically from Evergrande is unclear. Holiday events will take place, but it is silently frowned upon to join in. Tether, the world's largest 'stablecoin', said in a statement it does not hold any commercial paper or securities issued by embattled developer China Evergrande Group, as regulatory scrutiny into risks from this type of token grow. Stablecoin Tether says holds no Evergrande commercial paper Regulators are starting to pay greater attention to stablecoins - digital tokens which are pegged in value to other assets, often the U.S. dollar, and backed by a pool of assets - and some observers have raised concerns about the tokens' liquidity in a time of stress. Evergrande, which has total liabilities of more than $300 billion, is also in the spotlight as it scrambles to raise funds, teetering between a messy meltdown with far-reaching impacts, a managed collapse or a government bailout. Chinese real estate developers are some of the world's biggest issuers of commercial paper. Another 18 per cent is held in fiduciary deposits, more than 12 per cent in secured loans and nearly 10 per cent. How Ethereum's evolution impacts crypto markets.
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