Is the funding of the Tether stablecoin truly originating from China

Is Tether Stablecoin Truly Supported by Chinese Entities?
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NOIDA (CoinChapter.com)— Tether (USDT) has firmly established itself as a crucial component in the world of cryptocurrencies, providing stability and liquidity in an otherwise turbulent market. However, concerns persist regarding its reserve backing, transparency, and regulatory compliance, overshadowing USDT’s dominance.
In June 2023, the New York Attorney General’s investigation revealed that the stablecoin issuer has historically held significant amounts of commercial paper and securities issued by Chinese entities.
The doubts surrounding its backing raise questions about the stability of the project and the potential risks it may pose to the wider crypto market.
Tether’s Holdings: Concerns about Backing and Ownership
Consumers’ Research, a conservative nonprofit organization, has launched a major campaign against Tether, alleging connections to criminal activities and foreign governments. The organization claims that Tether has ties to the Chinese and Russian governments, terrorist organizations, and human trafficking operations.
There have been allegations that groups such as Hamas, Al Qaeda, and ISIS use Tether to evade US sanctions and finance illicit activities. Additionally, Tether’s refusal to undergo a complete audit raises concerns about the true backing of its reserves, drawing similarities to the FTX collapse.
An analysis of Tether’s asset backing reveals a complex and opaque business structure. Tether has spread its reserves across multiple financial institutions and investment vehicles, with a significant amount held in the Bahamas-based Deltec Bank & Trust.


Consumers’ Research is dubbing Tether as the next FTX.
Yes, that Bahamas, the country known for its “honest” and “law-abiding” banking system! The concentration of assets in the Bahamas raises questions about risk diversification and transparency.
Historical data shows that Tether’s reserves have included commercial paper and securities issued by Chinese entities, such as China Construction Bank Corp. and the Industrial and Commercial Bank of China.
Despite Tether’s claims of divesting from Chinese assets, verifying this is difficult due to the absence of independent audits.
Tether’s heavy reliance on offshore banks and its historical connections to assets based in China raise concerns about the stability and liquidity of its reserves. Regulatory bodies have flagged these issues, highlighting the importance of transparency and compliance in maintaining market confidence.
Market Impact of Allegations Against Tether
If the allegations regarding Tether’s opaque reserve management and potential Chinese backing prove to be true, the implications for the cryptocurrency market could be significant. The widespread use of the stablecoin means that any instability or loss of confidence could disrupt the market.
USDT’s role in providing liquidity means that any doubts about its stability could lead to sell-offs, affecting the prices of other cryptocurrencies and triggering a market-wide liquidity crisis.
Stricter oversight and potential sanctions against Tether could extend to other stablecoins, resulting in tighter regulations and compliance requirements.


USDT experienced a drop on June 16 before recovering. Source:
Tradingview.com
Furthermore, past investigations by the CFTC and the Department of Justice into Tether’s backing and price manipulations highlight ongoing regulatory scrutiny.
The erosion of trust in USDT due to allegations of Chinese backing could lead to a shift towards other stablecoins or fiat currencies, impacting trading volumes and overall market dynamics. Investors may seek safer alternatives, which could result in a revaluation of assets and increased volatility.
Given Tether’s integration into numerous crypto exchanges and DeFi platforms, any significant issues with its backing could pose systemic risks to the entire crypto ecosystem.