91����ԭ��

Tether reports larger profits than two US mega banks, Binance is sued by American victims of Hamas, and former UK chancellor George Osborne gets a new job at Coinbase.

Tether has reported a record-breaking profit of $2.85bn in Q4 2023, making the stablecoin issuer more profitable than large-cap US banks Morgan Stanley and Goldman Sachs.

Tether’s latest  report indicates that it made a $1.85bn profit from price appreciation in gold and Bitcoin, and a $1bn profit from interest on US Treasury bills.

In contrast, Morgan Stanley  a profit of $1.5bn for the quarter, and Goldman Sachs  a profit of $2bn.

Bank of America, the second-largest bank in the world by market cap after J.P. Morgan,  a profit of $3.1bn. Tether is estimated to have 50 to 60 employees, whereas Bank of America has 217,000 employees.

Tether’s latest attestation is also notable for setting a new record in holdings of cash and cash-equivalent assets by the firm.

Cash and cash-equivalents — mainly Treasury bills and money market funds — now make up 90 percent of Tether’s total reserves, while the remainder is in gold, Bitcoin and other assets.

Source: Tether

"Tether’s Q4 attestation underscores our commitment to transparency, stability and responsible financial management,”  Paolo Ardoino, CEO of Tether.

“Achieving the highest percentage of reserves in cash and cash equivalents reflects our dedication to liquidity and stability.”

Doubts as to Tether’s numbers

As 91����ԭ�� has written previously, Tether’s numbers ought to be taken with a pinch of salt. Despite entering its eighth year in business, Tether has still never undergone a full, professional audit.

Tether’s reserve “attestations” are not based on unrestricted access to Tether’s financial accounts, as would be the case for an audit.

Instead, the producer of the attestations, BDO Italia, looks at a “significant sample” of Tether’s stated reserves and verifies their current market value.

In addition, Tether does not publish the unique CUSIP numbers of the US Treasury bills it holds, meaning that third parties cannot independently verify these holdings.

As 91����ԭ�� has also written, Tether is likely under US investigation for offences similar to those that Binance was convicted of last year, including failures to implement know your customer (KYC), anti-money laundering (AML) and sanctions compliance.

Novacula Occami, a crypto compliance commentator,  that if Tether’s profit reading is correct, it is likely to embolden US regulators to seek more onerous settlement terms with the company if charges are filed.

Last November, following Binance’s conviction, deputy secretary of the Treasury Wally Adeyemo appeared to  that Tether may be the next target in the US crypto crackdown.

“We cannot allow dollar-backed stable coin providers outside the US to have the privilege of using our currency without the responsibility of putting in place procedures to prevent terrorists from abusing their platform,” he said.

“While some have heeded our calls and taken steps to prevent illicit activity, the lack of action by too many firms — both large and small — represents a clear and present risk to our national security.”

Hamas victims and bereaved relatives sue Binance

A group of US citizens are  Binance and former CEO Changpeng Zhao in New York, seeking damages due to trauma and bereavement caused to them by Hamas.

Two of the plaintiffs, mother and daughter Judith and Natalie Raanan, were kidnapped by Hamas in Israel on October 7 last year and held for a period of two weeks.

Plaintiffs from the Glisko family are appealing on behalf of Itay Glisko, a US citizen who was murdered by Hamas on October 7.

And plaintiff Jeffrey Ludimir is appealing on behalf of his nephew, Dr. Daniel Levi Ludmir, who was also murdered by Hamas on October 7.

The complaint quotes extensively from Binance’s $4.3bn settlement with the Department of Justice (DOJ) and the Office of Foreign Assets Control (OFAC).

It notes, for example, that between 2017 and 2022, Binance processed at least 1.6m transactions between US persons and users in sanctioned jurisdictions, with a total value of $706m.

“Binance processed numerous transactions associated with Hamas and related Palestinian terrorist groups, providing a clandestine financing tool that Binance deliberately hid from US regulators,” the complaint notes.

“Defendant Zhao not only knowingly permitted illicit actors, including Hamas and other terror groups, to evade US laws and regulatory restrictions related to terror financing, but also refused to put into place the legally-required-infrastructure mandated under US law to stop terrorism financing.”

The complaint seeks damages under the US Anti-Terrorism Act and the Foreign Sovereign Immunities Act (FSIA) on the grounds that the defendants provided “substantial assistance” to Hamas.

Also named as defendants are the governments of Iran and Syria, both of which are described as providers of weapons, funding and operational support for Hamas.

From chancellor to crypto advisor

Finally, this week Coinbase confirmed that it has hired former UK chancellor George Osborne as the latest member of its .

Faryar Shirzad, chief policy officer at Coinbase,  the appointment on X: “George is one of the most experienced and thoughtful leaders in government and business,” he said.

”We are grateful to have his advice and counsel as we expand Coinbase around the world.”

Osborne’s appointment is being seen as a move towards a potential investment in a new global headquarters for Coinbase in the UK.

Last year, when Coinbase CEO Brian Armstrong spoke at the Finance Global Summit in London, he sat down for a one-to-one fireside chat with Osborne.

“The UK is our second-largest market in terms of revenue,” Armstrong told Osborne.

“We’re founded in the US and I think the US has the potential to be an important market in crypto, but right now we’re not seeing the regulatory clarity we need.

“If a number of years go by where we don’t see regulatory clarity emerge in the US, we may have to consider investing more elsewhere and relocating wherever is necessary.

Osborne will join nine other former politicos on the Global Advisory Council, including Mark Esper, secretary of defence under President Trump, and Frances Townsend, counter-terrorism advisor under President George W Bush.

Former US senators Tim Ryan (D-OH)  and Pat Toomey (R-PA) and former House representatives Stephanie Murphy (D-FL) and Sean Maloney (D-NY) are also members of the council.