Tether $1B Deposits at Tory Donor’s Investment Group Involved in High Court Battle

Global largest stablecoin issuer, Tether, features in a high court battle for the $1 billion deposit in an investment group established by the Tory party donor. Reviewing the court filings submitted in London’s High Court indicates that Tether placed $1 billion deposits in the Britannia Financial Group’s subsidiary.

Court Battle Offers Rare Glimpse of Tether’s Banking Relationships

The third-ranked crypto asset by market capitalization is dragged into the controversy involving Julio Herrera Velutini, who in 2022 was indicted by US authorities for alleged bribery. The high court battle offers a rare glimpse of the banking relationships that Tether established over the years. 

The High Court battle in London lifts the corporate veil of Tether that, despite playing a pivotal role in the global cryptocurrency sector, has remained concealed. Also, Tether’s ownership structure and details regarding ties with financial institutions and $87 billion assets management under secrecy.

Including Tether in the London High Court proceedings affirms the third-ranked crypto asset’s widespread geographical presence. Besides, Tether’s stablecoin USDT facilitates crypto markets executing smooth trade on digital assets, including Bitcoin and Ethereum. 

The court filing attracts scrutiny of Tether, besides its past assertion that each of the 88,027,089,861 circulating stablecoins has a dollar backing, allowing investors to redeem the tokens on demand. Market observers have questioned Tether’s proof of reserves’ (POR) announcements, indicating that the capability to honor redemption promises ultimately relies upon the reserves’ safety and liquidity.

The ongoing legal battle regarding the over $1 billion deposit by the USDT stablecoin issuer is at the center of unreported contestation pitting Britannia Financial against Arbitral International. The latter involves an entity whose registration is domiciled in the British Virgin Islands. The court filings indicated that Tether Limited Inc. opened the account holding the funds with Britannia Financial’s subsidiary in November 2021. 

Britannia Financial involves an entity established by the embattled Venezuelan-Italian banker Julio Velutini, charged by the US authorities in August last year for an alleged bribery scheme. The scheme is said to feature a Puerto Rican politician, links that Velutini vigorously dismissed and labeled as baseless and politically engineered. However, the US authorities hardly accused Britannia Financial of any wrongdoing. 

Tether Draws Regulatory Scrutiny

Beyond the billion-dollar deposit, Tether has drawn regulatory scrutiny in the past. A 2021 incident featured accusations by the US Commodity Futures Trading Commission (CFTC) of misleading statements regarding the sufficiency of dollars backing the circulating stablecoins. 

A distinct investigation by New York’s attorney general examined Tether’s alleged concealing of huge losses starting in mid-2017 when it lacked access to financial institutions. Tether resolved the two probes without admission or dismissal of liability. 

Tether’s incoming chief executive, Paolo Ardoino, informed the Financial Times in 2022 that the USDT stablecoin issuer boasts strong relations with over seven financial institutions. The claims are revealed in the ongoing Arbitral v Britannia Financial legal battle that began when the plaintiff accused the latter at the onset of 2023, alleging failure to settle the full price for the Bahamas-based brokerage it acquired in June 2021.

Tether Deposits Plunges Business Sale Parties into Legal Battle

The filings submitted by both parties confirm an agreement requiring Britannia Financial to pay an extra sum relative to the revenue-generating assets the business would hold a year following the brokerage sale. The scope included revenue-yielding assets from customers originally introduced by Arbitral International or other related parties. 

Arbitral submission before London’s High Court claims Britannia owes it money as per the arrangement since Tether Limited Inc. made the billion-dollar deposit 12 months after the sale of the Bahamas-based brokerage.

The Financial Times publication on Tuesday, November 21, captures Britannia Financial’s dissent that it owes Arbitral International related to Tether’s deposits. The defendant argues that Tether deposited the funds with the London-based subsidiary identified as Britannia Global Markets and not the brokerage acquired from Arbitral International.

The court filings by the plaintiff identify Britannia Global Markets’s operations as executing brokerage and securities custodian services. The plaintiff’s counsel revealed that Tether was introduced to Britannia Financial by Aldo Mazella, described by the filings as the professional introducer. The professional has retained a commercial engagement with Tether since 2017. 

Arbitral disputes Britannia’s assertions indicating that an executive working at its former Bahamas brokerage had an input in the introduction.

Tether’s Preference for UK’s Firm to Hold Reserves 

Britannia Financial filing disclosed that Tether considered depositing a portion of the funds within the Bahamas-based brokerage that Arbitral sold. However, it decided against the move to desire the assets held within the UK instead of the Bahamas.

Britannia Financial operates from its London base, offering investment banking brokerage and wealth management services. The firm identifies with London that has recently upped efforts towards becoming a cryptocurrency industry hub. Regulators in early November proposed the potential of utilizing stablecoins as a means of payment within the UK territory.

The involvement of Tether in the London-based legal battle is unsurprising given that a Bloomberg publication in August linked Tether to utilizing Britannia Bank & Trust. It identified the entity as a Bahamas-based bank and subsidiary of Britannia Financial to execute dollar transfers.

Britannia Financial and Velutini’s Donation Activities 

Meanwhile, Britannia Financial has been in the media limelight owing to Herrera Velutini’s donation activities. He has remitted over £0.5 million towards the UK’s Conservative party since Boris Johnson assumed the prime minister’s office with £100,000 before the 2019 general election.

Britannia Financial in 2022 sponsored the platinum jubilee Pageant to mark the seventieth anniversary since the late Queen Elizabeth II ascended to the throne.

In an earlier submission to the media, Britannia Financial chief executive Mark Bruce confirmed Herrera Velutini ceased serving as director at Britannia Global Markets in November 2021. The CEO ruled out velutini’s involvement in the daily running of any Britannia entity.

A review conducted by Finserving on the Companies House filings shows that Velutini transferred ownership of the Britannia Financial Group to his son Julio Cesar Herrera.

Editorial credit: rafapress / Shutterstock.com