$10 billion worth of Tether was redeemed since the crypto crash

Tether (USDT), the multibillion-dollar stablecoin. has paid out $10 billion in withdrawals since the crypto crash started in early May. The pace of withdrawals means the company is effectively dealing with a slow-motion bank run, as depositors seek to move their cash to more heavily regulated stablecoins.

According to public blockchain data, $1 billion USDT was redeemed on Saturday, which means the cryptocurrency was handed back to the company and destroyed as part of the withdrawal process, The Guardian said. Another $1.5 billion had also been redeemed three days earlier. The total withdrawn is now about one-eighth of the entire reserves of the company.

The latest redemption comes after Tether published its latest statement of reserves, which shows that as of late March, the company had backed user deposits with a mixture of US Treasury bills, bonds in other private companies, and about $5 billion in miscellaneous “other investments,” including in other crypto assets.

Before, Tether claimed its reserves were backed one to one with US dollars. However, after an investigation by the New York attorney general, the company admitted that was not always the case and said that its currency was simply backed by “Tether’s reserves”. As part of that settlement, it agreed to publish a quarterly statement that detailed what those reserves comprise.

According to the latest statement, released before the recent crypto crash, Tether is storing about $20 billion of its cash in commercial paper, $7 billion in money market funds, and nearly $40 billion in US Treasury bills, all of which are generally stable investments. Another $7 billion, however, is stored in “corporate bonds, funds, and precious metals” and “other investments (including digital tokens).”

As a portion of Tether’s reserves, it is comparably small, but it opens the company up to the risk of breaking its promise to be “fully backed” should a large market fluctuation occur.

Meanwhile, Paolo Ardoino, Tether’s chief technology officer, said in a statement:

“Tether has maintained its stability through multiple black swan events and highly volatile market conditions and, even in its darkest days, Tether has never once failed to honor a redemption request from any of its verified customers. This latest attestation further highlights that tether is fully backed and that the composition of its reserves is strong, conservative, and liquid.”

As reported earlier, Tether temporarily sunk as low as 95 cents and struggled to climb back to its intended dollar peg on May 12, as the recent collapse of another stablecoin – TerraUSD (UST) – had shaken investors’ confidence. However, the world’s largest stablecoin regained its peg to the US dollar soon after more than $3 billion worth of tokens left the system in a single day.