Concerns have been raised concerning Tether Holdings’ lack of disclosure and its deviation from its original phase-out schedule of secured loans in 2023.
British Virgin Islands-based cryptocurrency issuer Tether Holdings has begun offering secured loans to consumers using its own tether coins. Less than a year after the firm first signaled its plan to phase out this lending practice, it has finally done so.
Tether Holdings reported $5.5 billion in loans as of June 30th, 2018, an increase from the $5.3 billion disclosed in the prior quarter’s financial report. A representative for Tether has verified that the business has begun making fresh loans.
The majority of the company’s assets are cash and short-term investments with little risk, such as Treasury bills, but loans provide a distinct challenge. The firm makes no promises about being paid back, exchanging loans for cash, or the sufficiency of collateral.
What’s interesting is how little we know about the background of these secured loans. Tether Holdings doesn’t give out a lot of details about the people they lend to or the exact assets they’ll take as collateral.
Tether Holdings reversed course in December 2022 when they said they would stop making new secured loans by the end of 2023; they have resumed lending since then. Short-term loan demands from long-standing customers in the second quarter of 2023 caused this shift, according to Alex Welch, a spokesman for Tether Holdings.
Welch would not comment on whether new loans were extended this year to avert defaults on current loans or why clients may have had to sell assets at disadvantageous pricing. Tether Holdings doesn’t produce audited financial statements or a full balance sheet, adding to the mystery surrounding the company.
