Tether pays out $10bn in withdrawals since start of crypto crash

theguardian.com:

Tether, the multibillion dollar “stablecoin” that functions as the largest bank in the cryptocurrency economy, has paid out $10bn (£8bn) in withdrawals since the crypto crash started in early May.

The pace of withdrawals means the company is effectively dealing with a slow-motion bank run, as depositors seek to move their cash to more heavily regulated stablecoins.

Per public blockchain records, $1bn of tether was redeemed – the cryptocurrency handed back to the company and destroyed as part of the withdrawal process – just after midnight on Saturday.

$1.5bn had already been redeemed the same way three days earlier. The total withdrawn is now, allowing for minor fluctuations in the stablecoin’s peg, about one-eighth of the entire reserves of the company.

The latest redemption comes after Tether published its latest audited accounts, which show that as of late March the company had backed user deposits with a mixture of US Treasury bills, bonds in other private companies, and about $5bn in miscellaneous “other investments”, including in other cryptocurrency enterprises.

However, some have questioned whether the accounts are as reassuring for depositors as they appear. If the company’s investments in cryptocurrency enterprises fell in value during the market crash, then it may have struggled to match customer deposits, one fintech analyst has argued.

Like all stablecoins, the tether currency is supposed to always be worth a fixed amount – in this case, one US dollar. It achieves that, the company says, by maintaining a large reserve of stable assets: while retail investors can buy or sell tether on cryptocurrency exchanges, institutional investors can also simply pay money directly to Tether to receive newly minted tokens, and