The chief technology officer of Tether has said his company has no exposure to Silvergate, as companies across the crypto industry line up to distance themselves from the troubled bank.
Silvergate is a U.S. bank that caters to the crypto industry, which has historically struggled to obtain banking, but has been rocked by financial woes as of late.
The San-Francisco bank last month revealed a $1 billion net loss, as well as a decline in customer deposits of roughly $14 billion in the last quarter of 2022.
Yesterday, it delayed its annual 10-K report filing with the U.S. Securities and Exchange Commission because it needed “additional time” to allow an independent accounting firm to complete certain audit procedures.
Now, its stock is plunging fast and crypto companies are severing ties with the firm. America’s biggest crypto exchange Coinbase earlier today said it was halting payments to and from the bank. In a Thursday tweet, Tether CTO Paolo Ardoino said: “Tether does not have any exposure to Silvergate.”
#Tether does not have any exposure to Silvergate.
— Paolo Ardoino 🍐 (@paoloardoino) March 2, 2023
Tether, the company behind the world’s largest stablecoin and most-traded cryptocurrency, is apparently doing well—despite the crypto industry’s current brutal bear market.
It reported last month that it still generated $700 million in profits in Q4 2022, despite processing $21 billion in redemptions last year.
Its stablecoin, USDT, is the third-largest cryptocurrency after Bitcoin and Ethereum, with a market cap of $71 billion.
And it changes hands more than any other digital asset: its 24-hour trading volume stands at over $34 billion, according to CoinGecko.
This is because USDT is pegged one-to-one with fiat currencies, so traders use the asset to quickly enter and exit trades, without having to deal with U.S. dollars, Japanese yen, or other fiat currencies in a traditional bank.
But Tether, as a company, is controversial: it has to date refused to prove its stablecoin is backed by U.S. dollars and the entity is not independently audited.
The company in 2021 agreed to no longer do business in New York after a two-year New York Attorney General investigation alleged that Tether “made false statements about the backing” of its stablecoin.