Embattled Tether to issue Chinese yuan-pegged stablecoin

Troubled stablecoin firm Tether is planning to issue a new stablecoin pegged to the Chinese yuan, local media ChainNews reported.

The company, which is owned by parent company iFinex, will issue the coin, known as CNHT, in the coming weeks, amid ongoing problems for the firm and its sister company, Bitfinex.

Described by some as a play to raise much-needed funds from crypto users, the move will see Tether join other firms in launching Chinese yuan-pegged cryptocurrencies.

Bitfinex shareholder Zhao Dong was quoted by the Chinese news outlet saying the launch should be expected “in the near future,” with the firm reportedly planning to hold reserve funds in offshore accounts.

Zhao Dong said that his digital asset management platform RenrenBit would invest heavily in the project, buying into the stablecoin for cash on its launch. Once the stablecoin becomes available, it will join cryptocurrencies pegged to the U.S. dollar, the Euro, and the as-yet unissued Japanese yen-pegged stablecoin.

In his remarks to local media, Dong pointed out that both Tether and Bitfinex would continue to work closely together under shared management, stressing the closeness of the ties between the iFinex companies.

The developments come at a time of increasing pressure on Tether and Bitfinex, following an investigation led by the New York Attorney General into financial handling at the firm.

The Attorney General alleges Bitfinex misappropriated Tether funds by ‘borrowing’ some $850 million from capital reserves originally set aside to underwrite its USDT stablecoin.

Despite telling investors that the stablecoin was backed 1:1 with U.S. dollar reserves, the attorney general alleges Bitfinex illegitimately turned to the money when it lost a similar amount in a transaction with a dubious offshore bank.

Prosecutors have said this amounts to a fraud against investors, and the firm lost its latest legal challenge to the investigation in court earlier this week.

Some analysts have described the move as an attempt to pull in more funds ahead of the investigation, with Bitfinex now required to submit documentary evidence before the court at the demand of the attorney general.

With some investors clearly already lined up for the new yuan-backed stablecoin, it will now be a race against time for Tether to issue the cryptocurrency ahead of more comprehensive investigations into its affairs.