Both Tether (USDT) and Bitfinex, which are two formidable names in the cryptosphere, recently lost their primary banking partner, Noble Bank, in a move that sent this nascent market and industry into a frenzy. Now, just three weeks after Noble Bank’s apparent collapse, crypto media outlet The Block has revealed that the Tether Foundation has likely found itself in the Caribbean, striking a deal with a local bank.
BREAKING: Tether is banking with Deltec Bank and holding USD reserves there. Some OTC desks have expressed interest in opening an account with Deltec Bank to redeem USDT directly. https://t.co/31cdBgz2mM
Per those familiar with the matter, which exclusively spoke with The Block’s Larry Cermak, Tether had reportedly relocated its reverses to Bahamas-based Deltec Bank. Reportedly, this banking deal was in the works for weeks, indicating that the organization behind the stablecoin never had plans to execute an exit scam of sorts. According to the same aforementioned insiders, some over-the-counter crypto trading platforms have overtly expressed interest in collaboration with Deltec to redeem USDT at a 1:1 ratio with bona fide U.S. Dollars. No further details were given on the matter.
Just hours after Cermak had consulted with his insider sources regarding Tether, The Block also revealed that Bitfinex, which goes hand-in-hand with Tether (USDT), had also established a new banking relationship, but this time, with a Hong Kong-centric financial institution.
Again, via sources who have knowledge of the matter, it was divulged that after Bitfinex’s account with HSBC seemingly dissolved, the startup moved to establish a relationship with the Bank of Communications (BC). More specifically, Bitfinex seemingly set up a shell company named “PROSPERITY REVENUE MERCHANDISING LIMITED” to work with BC, which uses Citibank as its intermediating institution for USD wire transfers.
Preceding this revelation, Bitfinex revealed its “improved fiat deposit system” that reportedly utilized some form of distributed banking to verify and process deposits. While the details regarding this new process were rather scant, it can be assumed that the exchange’s new account with BC likely enabled fiat deposits for the first time in weeks.
Due to this seemingly positive news, Bitfinex’s now-infamous Bitcoin (BTC) premium, which unironically ‘flew to the moon’ over the past 72 hours, finally began to subside. At the time of press, Bitcoin is trading at $6,750 on Hong Kong-based Bitfinex and $6,400 on Coinbase, resulting in a ~$350 Bitfinex premium.
While this may sound like a large spread, this is a far cry from the $1,000+ premium seen during the wee hours of Monday morning. This indicates that traders are beginning to restore their trust in the platform, even if negative news continues to circulate for the foreseeable future.
Despite Recovery To $0.98, Tether (USDT) Continues To See Pressure Arise
However, some fear that the worst has yet to come for both the Tether Foundation and Bitfinex itself, as these two organizations, mostly the former, have been seeing mounting pressure from all sides.
As reported by Ethereum World News yesterday, OKEx, the second largest crypto platform in existence, revealed that it intended to add four of the foremost competitors to Tether (USDT). Not 24 hours after Malta-based OKEx backed these alternative stablecoins, Huobi, a multinational exchange with over $200 million in average daily volume, divulged a near-identical plan through an official press release, which was routed through the startup’s Twitter account.
As per the announcement, Huobi will be supporting deposits and withdrawals for True USD (TUSD), Circle-backed USDC, Gemini’s GUSD, and the Paxos Standard (PAX) on October 19th, but didn’t add when trading would begin. Explaining the reasoning behind the move, Livio Weng, the VP of Huobi Group, told CoinDesk:
Tether is one of the biggest stablecoins in the market, and realistically it will take some time before other stablecoins can catch up. We currently have no plans to restrict trading, deposits, or withdrawals in regards to Tether. However, in the interest of providing users with more choice, we are also in the process of listing several new stable coins.
In other news that indicates that the industry’s foremost stablecoin is under a growing amount of pressure, Tether (USDT), which had a market cap of $2.8 billion at its peak, recently saw a large amount of capital exit its doors en-masse. As spotted by the astute individuals over at CCN, the market cap of USDT has recently fallen to as low as $2.2 billion, indicating that the backers of the stablecoin project are looking to cash out their money.
While not much is known about the Tether Foundation’s investors, this indicates that these organizations may be getting worried about holding their assets in the stablecoin project.