Stablecoins are a powerful tool for global financial inclusion. They provide access to necessary financial services to billions of people around the world. People who would otherwise lack access to dependable monetary and financial services, a fundamental necessity to thriving in the modern world.
Stablecoins have served as the bedrock of a half-decade of innovation in building decentralized financial systems. As such, the focus is commonly centered on how stablecoins open up previously closed financial markets and provide tools for global financial freedom.
However, Tether also supports global law enforcement and assist in preventing crime, terrorism, and critical national security threats. Preventing bad actors from abusing financial networks is a critical part of building modern payment systems.
Tether’s ability to support law enforcement is built on the ability not only to follow the movement of USD₮ as bad actors move funds around but to freeze USD₮ following appropriate legal proceedings and risk assessments.
Tether works closely with law enforcement worldwide to assist in investigations, and has to date assisted in freezing over $360million in assets, $101million of which have either been reissued or are scheduled to be reissued.
Beyond individual users, Tether has safeguarded assets that got caught in protocol and exchange hacks. When Poly Network was hacked, Tether responded swiftly and froze $33 million in USD₮ moments before it was going to be deposited into Curve, which may have resulted in the loss of these funds.
Poly network thanked Tether for its swift response in protecting user assets. As recently as last week, Binance Smart Chain suffered a hack that resulted in $570 million being lost (prior to any freezes or recovery actions). Tether was able to respond within 20 minutes of the hack and freeze the attacker's USD₮ wallet.
As stablecoins become a larger part of global commerce, it is critically important for law enforcement to prevent national security threats and financial crimes. This represents an important collaboration between the generally unstoppable transaction regime of cryptocurrencies and the world of traditional institutions.
Tether is proud of its strong relationship with the DOJ. Particularly because Tether, a non-US company that does not operate in the US, only provides this assistance voluntarily when there are legitimate law enforcement requests. Tether is in almost daily contact with numerous key law enforcement officials and has been able to respond to their inquiries in a rapid and consistent manner.
In fact, a number of DOJ prosecutors have praised Tether for its proactive role in supporting DOJ investigations and inquiries. In the last few months Tether has frozen tens of millions of dollars worth of USD₮ in response to valid law enforcement requests.
However, Tether simultaneously continues to advocate for financial freedom and inclusion. We stand strong for our community in advancing financial freedom. This is even more critical where Tether is bringing financial freedom to communities and areas that banks have forgotten or gave up.
The core goal of Tether is to provide these communities, areas, and functions with access to the financial tools they need to thrive and participate in modern economic systems.
Update on Tether’s Reserves
As promised, Tether will once again demonstrate a commitment to transparency in our next quarterly attestation. Portfolio updates will include a reduction in commercial papers, now making up less than $50M of its reserves, and the holding of 58.1% of its assets in US T-bills.
It is critical to note that Tether was able to complete this conversion with no incidences of drawdown or loss. This was possible because Tether has always selected the highest quality collateral, regardless of whether this collateral was commercial paper or US Treasuries.
Tether was also able to process redemptions for billions of dollars of USD₮ during the crypto market drawdown with ease while continuing to convert its commercial paper holdings to US Treasuries. For more updates on Tether reserves, refer to transparency page.
Tether’s plans to continue to reduce commercial paper holdings, bolstered by rising rates on US Treasuries, continues as planned and is on track to reach zero commercial paper holdings by the end of October 2022.
Financial Freedom and Financial Safeguards
By maintaining a balance between these two priorities, Tether can advance financial freedom in the 21st century, and promote technological innovation while providing some needed safeguards for victims of hacks and the deliberate use of new financial tools for nefarious ends.
Tether values providing the entire world with access to dollar based liquidity to promote inclusion in payment systems, currency stability, and breaking down barriers to trade. However, financial freedom goes hand in hand with ensuring that bad actors are not incentivized to take advantage of these new networks.
Tether values its relationship with law enforcement and holds its rapid response times and near daily communication with key figures as a point of pride.
