Tether Allows Access to Reserves Post Depegging Fiasco

Paigambar Mohan Raj
Source: Coindesk

Tether marginally departed from its peg to the US dollar yesterday. Due to an imbalance in Curve’s 3pool, the stablecoin dropped to a low of $0.996. The current breakdown of the 3pool, which has a total value of $8.2 million, is as follows: DAI: 2,364,188.2 (28.92%); USDC: 1,255,816.09 (15.38%); and USDT: 4,554,979.24 (55.70%). The recommended weight for each stablecoin is 33.3%, while USDT’s weight once reached 74%.

The slight deviation from the dollar raised some questions about a possible depeg. USDC most recently had a slight depeg, but it recovered. The UST (TerraUSD) depeg last May, however, was not so lucky.

Prior to 2021, Tether was required to provide reports to the NYAG as part of its settlement commitments. Later, CoinDesk requested disclosure of Tether’s quarterly reports under the Freedom of Information Law (FOIL) of New York. Tether gave up its legal battle to keep that information secret on June 15, allowing CoinDesk to get the NYAG docs.

What do Tether’s reserves look like?

The reserve figures have not yet been published by CoinDesk. However, Tether believed that the timing of the depeg is suspicious. Tether’s CTO Paolo Ardoino addressed the matter on Twitter, calling it an attack on the company and stating that they are ready to “redeem any amount.” Lookonchain claimed that some whales were dumping USDT in Curve’s 3pool.

Tether’s reserves have been the subject of many debates. The firm has given multiple promises to disclose its reserves but it has never delivered. Perhaps the latest disclosure will get us closer to what’s really in the stablecoin’s vaults.

The firm stressed its “continued commitment to transparency” while also stating that the “information is now much less relevant.” The reports made public extend through the middle of 2021. Tether further stated that since the initial reports, it has decreased its portfolio of secured loans and lowered its commercial paper reserves to zero.