Leading stablecoin cryptocurrency Tether and cryptocurrency exchange Bitfinex have decided to leave their long term financial services provider, the Puerto Rico based Noble Bank and are considering working with another service provider.
The two decided to look elsewhere allegedly following the findings of an inspection of the bank by a local regulator which raised some “concerns”, details of which were not given, neither was it mentioned which bank they are considering working with.
According to analysis by Honkong based trading platform BitMEX, Tether was doing well prior to its decision to leave Noble, evident by the fact that it printed about 500 million tokens in August only. An analysis of Tether’s bank accounts earlier this year also showed that it had sufficient Dollar backing at the time.
Despite the growth of Tether at the time however, a research showed that Puerto Rico financial data for the second quarter of 2018 showed total bank deposits of financial institutions in the International Financial Entities (IFE) category to which Noble Bank belongs was down by 18.4%.
Part of the research which was published today, 2 October 2018 on BitMEX’s blog read:
“In our view, this data supports the assertion that Tether is moving its reserves out of Noble and into other banks outside of Puerto Rico.”
This statement has been confirmed by Tether insiders had also claim that Tether funds have been diversified into other banks.
Bloomberg also commented on the financial data of Puerto Rico. It said:
Puerto Rico has seen a surge of cash related to cryptocurrencies. By the end of 2017, cash and equivalents held by so-called international financial entities, such as Noble, soared to $3.3 billion from $191 million a year earlier, according to data from Puerto Rico’s bank regulator. As of June 30 this year, the total had dropped to $2.6 billion. The majority of that money on the island was held by Noble, people familiar with the matter said earlier this year.
Meanwhile, Noble Bank is looking for a buyer due to its revenue lax resulting from 2018’s cryptocurrency market crash that has lasted throughout the year. The sale of the company may also have to do with the departure of Tether and Bifinex as the source said the bank is no longer profitable after losing many clients including Tether and Bitfinex.
According to a source,
“The company could sell itself for a price between $5 million and $10 million, based largely on the value of its Puerto Rican license to operate as an international financial entity,”
While Noble seeks a buyer, reports say that Tether and Bitfinex are still on a search for a new reserve bank.