.svg)
A Tether custodian shares an eyewitness account of Tether’s reserve assets, Chainalysis reports another bumper year for crypto crime, and Sam Bankman-Fried’s parents attempt to distance themselves from the crimes of their son.
The CEO of asset management firm Cantor Fitzgerald has assured investors that all of Tether’s stated reserves are present and accounted for.
Speaking to Bloomberg in Davos, Switzerland, CEO Howard Lutnick said his firm has done extensive research on Tether’s reserves and can confirm that the assets are all there.
“From what we've seen — and we did a lot of work — they have the money they say they have,” said Lutnick.
“I've seen a whole lot and the firm has seen a whole lot, and they have the money. There's always been a lot of talk — ‘Do they have it or not?’ — so I'm with you guys saying we’ve seen it and they have it.”
New York-based Cantor Fitzgerald is a key custodian of US Treasury bills that appear in Tether’s reserve attestation reports.
As noted by Lutnick, Tether’s latest attestation, from Q3 last year, indicated that Tether has $86bn in assets and $83bn in liabilities. Of the $86bn in assets, $72bn is attributed to US Treasury bills.
If true, this would make Tether one of the largest holders of US Treasury bills in the world. As of January 2023, according to US Treasury statistics, only 21 countries hold more than $72bn in US Treasury bills.
‘Opaque’ Tether keeps CUSIPs concealed
Holdings of US Treasury bills are usually verifiable based on unique "CUSIP" numbers (Committee on Uniform Securities Identification Procedures).
The CUSIP system is operated by FactSet Research Systems, which acquired it from S&P Global in 2022.
Other stablecoin issuers, such as Circle and Paxos, also have large holdings of US Treasury bills, and they publish the CUSIP numbers for these holdings on a monthly basis.
In contrast, Tether does not publish the CUSIP numbers of its US Treasuries, meaning that third parties are unable to independently verify that they exist.
For this reason, among others, Tether was described as “opaque” in a stablecoin risk assessment by S&P Global last year.
Elusive audit still forthcoming
Moreover, it is well known that Tether has never undergone a full audit of its accounts, despite having been in operation since 2014.
Tether’s reserve “attestations”, such as the one mentioned above, are not based on unrestricted access to Tether’s financial accounts, as would be the case for an audit.
Instead, the producer of the attestations, BDO Italia, looks at a “significant sample” of Tether’s stated reserves and verifies their current market value.
In July 2021, CNBC asked Tether’s general counsel, Stuart Hoegner, when the company plans to undergo an audit, and Hoegner said it is likely to be “months away, not years”.
The question was pertinent at the time, as five months earlier, Tether had been banned from doing business in New York for “overstating” its reserves, among other charges.
In October 2021, Tether settled similar charges with the Commodity Futures Trading Commission (CFTC) for making “untrue or misleading” statements about its reserves.
Although Tether has been promising to undergo an audit since 2017, the promise remains unfulfilled.
Crypto crime fell but still thrived in 2023, says Chainalysis
A new report from blockchain analytics firm Chainalysis has found that transfers by illicit crypto addresses in 2023 came to a total value of $24bn.
Published in the firm’s annual trends report, the total in 2023 was 40 percent lower than the total in 2022 ($38bn).
The biggest driver of the overall reduction was the retroactive inclusion of FTX creditor claims, worth $8.6bn, in the figures for 2022.
Next, transfers from the proceeds of scams and theft (i.e., crypto hacks) dropped 29 and 54 percent respectively.
As in 2022, the largest single contributor to illicit transfers in 2023 was sanctioned entities, coming in at $14.9bn for the year.
Chainalysis noted that most of these entities are sanctioned by the US Treasury’s Office of Foreign Assets Control (OFAC), but are located in jurisdictions where US sanctions are not enforced.
Russian crypto exchange Garantex, for example, was a major driver of transaction volume associated with sanctioned entities.
In 2022, Garantex was sanctioned by OFAC for facilitating more than $100m in transactions with illicit actors and darknet markets.
“Exposure to Garantex introduces serious sanctions risk for crypto platforms subject to US or UK jurisdiction,” said Chainalysis.
“Those platforms must remain ever-more vigilant and screen for exposure to Garantex in order to be compliant.”
Bankman-Fried’s parents continue to resist asset seizure
Finally, the parents of convicted fraudster Sam Bankman-Fried have submitted new arguments in court claiming that they had “no fiduciary relationship” with their son.
On Monday (January 15), Joseph Bankman and Barbara Fried rebuffed efforts by FTX, now under new management, to recover millions of dollars of assets on behalf of FTX customers.
The assets in question include a “gift” of $10m from Sam to Joseph in 2021; a $16.4m mansion in the Bahamas purchased by Joseph and Barbara in 2022; and donations of more than $5.5m to Stanford University, Joseph and Barbara’s employer.
The defendants’ argue that they have never served as a director, officer or manager of FTX, de facto or otherwise, despite the plaintiffs’ claims to the contrary.
They further assert that they cannot be expected to have known about their son’s fraudulent schemes, as at the time of the above transactions, FTX was widely believed, including by the defendants, to be a solvent and highly successful company.
Bankman and Fried are seeking to dismiss the 12-count complaint in full.
