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Tether had more than $1 billion entrusted to a financial services group founded by a conservative donor who was indicted on bribery charges by U.S. authorities last year.
The world’s largest stablecoin issuer is entrusting its funds to a subsidiary of Britannia Financial Group, according to filings filed with the High Court in London, providing a rare glimpse into the banking relationships Tether has built. This is an example.
Despite Tether’s pivotal role in the cryptocurrency market, the company has come under intense scrutiny for its ownership structure, how it manages its roughly $87 billion in assets, and its relationships with financial institutions. Its stablecoin, USDT, powers the crypto market and provides a frictionless way to trade assets such as Bitcoin and Ethereum.
Tether says its stablecoins are backed by $1 each, allowing investors to redeem digital tokens on demand. The company’s ability to keep its promises ultimately depends on the liquidity and safety of its reserves.
More than $1 billion in Tether deposits are at the center of a previously unreported legal battle between Britannia Financial and Arbitral International, a company registered in the British Virgin Islands. Tether opened an account with a subsidiary of Britannia Financial in November 2021, according to court filings.
Britannia Financial was founded by Julio Herrera Bertini, a Venezuelan-Italian banker who was indicted by U.S. authorities in August 2022 for an alleged bribery scheme involving Puerto Rican politicians. Herrera-Vertini strongly denied the accusations, calling them “baseless” and “politically motivated.” Britannia Financial has not been accused of wrongdoing.
Tether itself is subject to regulatory oversight. In 2021, the Commodity Futures Trading Commission alleged that the company made misleading statements that it had enough dollars to back each stablecoin in circulation.
In the same year, the New York State Attorney General investigated Tether on suspicion of concealing huge losses, and it was revealed that the group had no access to any banks in the world for a period starting in mid-2017. Tether resolved both investigations without admitting liability.
Paolo Ardoino, the company’s chief technology officer, told the Financial Times last year that it had strong relationships with more than seven banks.
Earlier this year, the Arbitration Tribunal filed a complaint against Britannia Financial in London for failing to pay the full price of a Bahamas-based brokerage firm it sold to the group in June 2021.
According to filings from the parties, Britannia Financial will receive a refund based on the amount of income-producing assets held by the business in the year following the sale, including from customers originally referred by arbitrators or related parties. There was an agreement to pay an additional amount.
The arbitral tribunal holds that Tether is liable under the arrangement because its deposits were made within 12 months after the sale of the business. Britannia Financial denies it owes any more, saying Tether parked the funds in its London-based subsidiary Britannia Global Markets rather than in the brokerage firm it acquired from Arbitral. Britannia Global Markets operates as an executive broker and securities custodian.
Britannia Financial claims that it was Aldo Mazzella who introduced Tether, and the filing describes him as a “professional introducer” who appears to have had a commercial relationship with Tether since around 2017. It is said that it is. Former Bahamian brokerages also played a role in the implementation.
Britannia Financial said in a court filing that Tether had initially considered placing some of its funds in a Bahamas-based brokerage firm it had acquired from Arbitral, but that it had “transferred assets to the UK rather than the Bahamas”. “I want to hold it,” he said.
Britannia Financial, headquartered in the Scalpel Building in London, provides investment banking, brokerage, and wealth and asset management services.
London has sought to establish itself as a hub for the crypto industry. Earlier this month, regulators laid out proposals that could eventually lead to the use of stablecoins as a means of payment in the UK.
In August, Bloomberg reported that Tether began using Britannia Bank & Trust, a Bahamas-based bank also owned by Britannia Financial, to process dollar transfers.
Herrera-Vertini has donated more than £500,000 to Britain’s Conservative Party through Britannia Financial since former Prime Minister Boris Johnson took office, including £100,000 before the 2019 general election. Included. Last year, Britannia Financial sponsored the Platinum Jubilee Pageant to commemorate the 70th anniversary of the late Queen Elizabeth II’s accession to the throne.
This summer, Herrera Veltini transferred ownership of Britannia Financial Group to his 26-year-old son Julio Cesar Herrera, according to filings with the Companies Office.
Britannia Financial chief executive Mark Bruce told the FT that Herrera-Vertini will step down from the board of Britannia Global Markets in late November 2021 and will “be involved in the day-to-day management of other Britannia entities.” was not involved in any way.”
Tether and Mazzella did not respond to requests for comment. A lawyer for Arbitration International declined to comment.
