Tether Partnership Gone Wrong? Britannia Bank Hit With Lawsuit Over $1B Deposit

Tether (USDT), the largest stablecoin issuer in the world, is finding its banking partner, Britannia Financial, at the center of a legal battle. Arbitral International, a British Virgin Islands corporation, is suing Britannia over a $1 billion Tether deposit. 

Tether’s Banking Choice Backfires

According to a recent Financial Times report and court filings in the High Court of Justice in London, Tether has a deposit of over $1 billion with a subsidiary of Britannia Financial Group. 

This deposit is central to the legal dispute between Britannia Financial and Arbitral International. Tether’s decision to place funds with Britannia Financial, founded by Venezuelan-Italian banker Julio Herrera Velutini, comes amid allegations of bribery against Herrera Velutini by US authorities. Britannia Financial, however, has not been accused of any wrongdoing.

The stablecoin issuer itself has faced regulatory scrutiny in the past. The Commodity Futures Trading Commission (CFTC) previously alleged that Tether made misleading statements about the dollar reserves backing its stablecoins. 

Additionally, the New York attorney-general investigated the crypto company for allegedly concealing significant losses and revealed that the company faced challenges in accessing banking services worldwide. 

Arbitral International filed a claim alleging that Britannia Financial failed to pay the full price for a brokerage it sold to the group. The agreement between the parties included additional payments based on revenue-generating assets held by the business a year after the sale. 

Arbitral claims that Tether’s deposit falls within this period, entitling them to additional compensation. Britannia Financial, however, argues that the company deposited funds with its London-based subsidiary, Britannia Global Markets, rather than the brokerage in question.

Britannia Financial’s Ties To Tether Revealed

Per the report, Britannia Financial was introduced to Tether by Aldo Mazzella, a “professional introducer” believed to have had a commercial relationship with the crypto firm since approximately 2017. 

Tether’s decision to keep its assets in the UK rather than the Bahamas, where Britannia Financial acquired a bank called Britannia Bank & Trust, is highlighted in court filings. Britannia Financial, headquartered in London, offers investment banking, brokerage, asset, and wealth management services. 

Julio Herrera Velutini, founder of Britannia Financial, has donated significantly to the UK’s Conservative party and sponsored events commemorating Queen Elizabeth II’s jubilee.

The legal battle between Britannia Financial and Arbitral International over Tether’s $1 billion deposit shines a light on the firm’s banking relationships and its regulatory challenges. 

The outcome of this litigation may impact Tether’s reputation, the stability of the stablecoin market, and the broader regulatory landscape surrounding digital assets, and it remains to be seen how this legal battle will unfold.

Featured image from Shutterstock, chart from TradingView.com