Newly released legal documents provide details on Tether’s banking relationships and commercial paper exposure.

The blockchain shows that in March 2021, Tether, the issuer of the world’s largest stablecoin by market capitalization, kept its funds in various banks, investment management firms, gold depositories, a gold broker, and even its own sister company Bitfinex. In addition, the company had funds in commercial paper issued by several entities, including Barclays Bank, Deutsche Bank, and Natwest Group PLC, among others. Tether has previously acknowledged putting funds in commercial paper, but the extent to which the company relied on this type of asset was previously unknown. Various Chinese banks and financial institutions issued commercial paper that Tether used to back its token.

According to documents obtained via a Freedom of Information Law request to the New York Attorney General’s office, Tether claimed to have more than $35.5 billion in U.S. dollar equivalents at these institutions as of March 31, 2021. The documents offer a rare but limited window into Tether’s finances, which have long been a subject of controversy and conjecture in the crypto industry. Tether is designed to hold its value against the U.S. dollar, with Tether claiming it holds at least a dollar’s worth of assets in reserve for every single USDT token in circulation. The company has long been dogged by concerns that USDT has been less than fully backed, concerns the New York State Attorney General’s office seemingly vindicated in April 2019 when it announced that Tether had loaned some $850 million in reserves to Bitfinex, an exchange it shares corporate officers and parentage with.

In its FOIL request, blockchain requested documents detailing the USDT stablecoin’s backing after Tether published its first public document laying out what its reserves were composed of. At the time, nearly half was in unspecified commercial paper. In announcing its settlement with the NYAG’s office in 2021, Tether claimed it would publish the same information it shared with the NYAG on its reserves for at least two years. Its first public release, in May 2021, amounted to a pair of pie charts and a brief statement. The released documents contain a portfolio report with far more information, providing specific U.S. dollar amounts for Tether’s reserves.

According to CoinGecko, as of 10:30 p.m. ET on March 31, 2021, there were $40.8 billion worth of USDT in circulation.

The same document provides details about the assets held by each institution, confirming that Tether had a significant amount of its reserves in commercial paper.

Another report, issued by Ansbacher, further breaks down these details, showing that nearly 85% of Tether’s holdings at the financial institution were commercial paper. Corporate bonds made up the bulk of the remainder, with 13.7% of Tether’s holdings taking that form. High yield bonds, floating rate notes and credit accounts made up the remainder.

The document was not signed.

Similarly, Capital Union Bank provided a report which said nearly 88% of Tether’s holdings were “liquid assets,” though it did not provide a further breakdown.

Several of these documents detail the Tether legal team’s communications with the NYAG’s office immediately after they settled the regulator’s long-running inquiry into Tether.

According to one of these communications, the NYAG’s office had questions about Tether’s commercial paper holdings after the settlement.

“Regarding Tether’s acquisition of commercial paper assets, Tether maintains accounts at different banks as identified in our prior letter. Tether requests quotes for commercial paper offerings from those banks who, in turn, request these from brokers and other counterparties who either deal directly with issuers for the issuance of commercial paper, or who deal on secondary markets to purchase commercial paper,” read a letter from Tether’s outside counsel sent on June 25, 2021.

Blockchain obtained the documents after a nearly two-year legal battle after Tether filed to block the NYAG from releasing them. Klaris Law represented Blockchain in court, securing a victory in February.

Prior to the publication of this article, Tether published a statement acknowledging the NYAG FOIL officer’s release of the documents after the company did not take the steps necessary to appeal a court decision ordering the documents be shared. A second statement published Friday purported to detail what was in the documents.

“Tether initiated these proceedings in the first instance to prevent the public dissemination of confidential customer data and to prevent the use of sensitive commercial information that could potentially be exploited by malicious actors,” the first statement said. “However, our ongoing and demonstrable commitment to transparency means that we must prioritize openness over further time-consuming and unproductive American litigation that distracts from the real issues facing our community.”

Tether did not immediately respond to a detailed list of questions about some of the documents.

In its statement, Tether also said it “found it suspicious” that USDT depegged after millions of dollars’ worth were sold on decentralized finance pools “on the same day” that the New York government shared the documents with Blockchain.

In fact, the stablecoin briefly lost its peg prior to 07:00 UTC (3:00 a.m. ET) on June 15, at least five hours before the NYAG FOIL officer shared the documents with Blockchain’s attorneys.

“Blockchain learned from our lawyers on June 12 that we would finally receive the documents after a long court dispute in which Tether tried to block their disclosure,” said Marc Hochstein, Executive Editor of Blockchain. “We did not share the news of our win with anyone outside our editorial staff until after we received the documents on the morning of June 15 in New York, hours after USDT lost its peg. Blockchain stands by the integrity of our reporting.”

Edited by Marc Hochstein, James Rubin, Pete Pachal and Michael J. Casey.