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The stablecoin provider, however, did use the bank’s proprietary software to access the U.S. financial system.
Signature And Signet
Tether, which is the largest stablecoin issuer in the world, has denied all claims that it was exposed to the now-collapsed Signature Bank. The latter was forced to shut down all operations, and some of its loans were taken over by the New York Community Bancorp (NYCB). The bank also shut down the accounts of all crypto-related clients. However, the bank’s proprietary software Signet, which allows clients to send funds in USD across different crypto platforms, is being handled officially by the Federal Deposit Insurance Corporation. This real-time payments platform has been an important tool for many major crypto clients and is currently still operational even after the shutdown of the bank.
Tether Used Signet For Funds Transfer
Regarding the question of Tether’s exposure to the Signature Bank, it is known that the stablecoin issuer did not have an open account at the bank. However, according to some unnamed sources, the crypto firm had used Signet. The reports claim that Tether used the payment service to transfer U.S. clients’ funds from the United States to the Capital Union Bank in the Bahamas. These transactions continued till the Signature Bank was shut down and taken over by regulators in March.
The Tether team was reached out for a comment. In response, the team said,
“Banks used by Tether always had access to several banking channels and counterparties. This 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.”
Tether Had No Signature Account
The rumor of Tether’s exposure to Signature Bank first started with a Bloomberg article, which made it appear that Tether had used the bank to find a path into the U.S. financial system.
However, the stablecoin provider sent out emails to other news outlets clarifying its official response to the situation. In the emails, the company re-emphasized that it has had no exposure to any of the three recently-collapsed banks - Silvergate, Silicon Valley, and Signature. The email also called out the article for failing to mention that no Tether account was set up at the bank.
Tether CTO, Paolo Ardoino tweeted,
“As I stated on 12th of March 2023, Tether didn't have any direct or indirect exposure to Signature. Good risk management where everyone failed.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.