Tether, the issuer of the major stablecoin USDT, denied having exposure to either Genesis Global Capital or Gemini Earn. Some, however, wonder how it is possible for such a large company not to be affected by any of the massive events that shook the crypto space this year.
The company said in an announcement that it was “operating business as usual,” claiming that,
“With recent news surrounding Genesis today, Tether would like to confirm that it has absolutely no exposure to Genesis or Gemini Earn.”
Tether coins, it added, are 100% backed by reserves, while the assets backing the reserves exceed the liabilities. The company’s portfolio includes cash, cash equivalents, and US treasuries.
It stated that,
“It is important at a time like this to highlight that these reserves have proved tried and true demonstrating consistent resilience during the black swan events that have characterized the market this past year.”
As reported, the crypto lending division of Genesis Trading, Genesis Global Capital, which belongs to the Digital Currency Group (DCG), the parent company of Grayscale Investments, as well as crypto exchange Gemini are among the latest crypto victims of the FTX contagion.
Genesis announced on Wednesday that it was halting redemptions on its lending product and would stop making new loans. It claimed that Genesis’ trading and custody businesses remain unaffected.
Soon after, Gemini said it would be stopping redemptions on its Gemini Earn yield products. Genesis provides services to Gemini. “This does not impact any other Gemini products and services,” it said.
However, some doubt the type of statement issued by Tether, arguing that, given the extent of the Terra and FTX contagions, it’s nearly impossible to stay unaffected.
Adam Cochran, a crypto researcher and partner at the venture fund Cinneamhain Ventures, tweeted that numerous companies claimed not to be exposed to the collapsed or troubled projects such as FTX, Terra, Celsius, Three Arrows Capital, and most recently BlockFi.
“It’s almost mathematically impossible for them to all be telling the truth,” Cochran argued.
Others argued that all these companies who claimed no exposure in fact have indirect exposure – “which is still exposure.”
Nonetheless, some continued to claim that they are indeed one of those ‘impossible’ cases, such as Vlad Andrei, Founder and Managing Partner at Albaron Venuters, an investment firm focused on ventures and projects related to fintech, blockchain, decentralization, digital currency, and cryptoassets.
Meanwhile, as reported, last week Tether froze $46.5 million of USDT held by FTX, reportedly at the request of law enforcement. The USDT was held on the Tron blockchain in a wallet belonging to the exchange.
At the time, it also claimed that it “has absolutely no credit” towards FTX or its parent company Alameda Research, and that it “is completely unexposed” to the two companies.
Tether also may have seen some legal issues of its own again recently. The US Department of Justice reportedly revamped a probe into whether its executives committed bank fraud in the early days of the stablecoin. But the company denied the report, saying: “This is Bloomberg recycling old news that isn’t even factual. This represents yet another example of their incompetent journalism and inability to separate fact from falsity.”