Business In News
- Stablecoin giant Tether reportedly gained access to the U.S. banking system through Signature Bank.
- The USDT issuer used Signature Bank’s Signet platform to direct payments from its crypto clients.
- Tether CTO Paolo Ardoino has described the report by Bloomberg as a “clickbait article.”
Tether, the firm behind the world’s largest stablecoin, reportedly leveraged its relationship with Signature Bank to gain access to the financial system of the United States. Financial institutions have historically been reluctant to cater to clients with ties to the crypto industry, however, a report by Bloomberg revealed that the USDT issuer was able to find its way into the U.S. banking system, thanks to Signature.
Tether used Signature Bank’s Signet to direct payments to the Bahamas
According to the report by Bloomberg, Tether had a system in place at Signature Bank wherein their crypto clients were able to pay for their stablecoins by transferring US Dollars to Capital Union Bank, the USDT issuer’s banking partner based in the Bahamas. The transfers were made through Signature’s Signet platform, which was a popular payment network that allowed the bank’s crypto clients to settle trades.
People familiar with the matter revealed that the arrangement between Tether and Signature Bank was in place when the latter was seized by the New York Department of Financial Services (NYDFS) last month and handed over to the Federal Deposit Insurance Corp (FDIC). In the days leading up to the seizure, the bank was being examined by New York regulators to determine if enough steps were taken to detect money laundering by clients. While the arrangement may not necessarily be illegal, banks have a responsibility to have knowledge of who has access to their products and services.
“Banks used by Tether always had access to several banking channels and counterparties.”
In a statement sent to Bloomberg, Tether acknowledged the arrangement with Signature, adding that its risk policy “enabled us to identify particular risks and weaknesses that others had missed, ensuring our entities wouldn’t be affected by either direct or indirect exposure to Signature.” Chief Technology Officer Paolo Ardoino called the report a “clickbait article.”