Tether executives seem to be getting more and more upset as the prominent mainstream media draws more attention to the stablecoin’s alleged reserves.
This week, The Wall Street Journal published an article questioning Tether’s claims that it has enough reserves to back the USDT stablecoin, which is currently worth over $65 billion in circulation. Specifically, the WSJ has expressed concern that Tether is willing to lend his USDT to exchanges and market makers who offer sketchy tokens as collateral in exchange for selling his USDT for his USD. Did.
Tether’s latest legally-enforced reserve proof (despite repeated promises, the company has never submitted to a third-party audit) puts it at $6.1 billion as of Sept. 30. secured loan”. This represents 9% of USDT currently in circulation, up from 5% on Dec 31, 2021.
Tether spokesperson Alex Welch claims that “only qualified clients are borrowing USDT” and that these loans are “very liquid assets that Tether’s prudent risk management allows as collateral. It is over-collateralized by
However, Tether’s willingness to lend out USDT contradicts the company’s previous statement that it “issues new Tether tokens only on demand.” When purchased by the customer. (emphasis added) And Welch declined to identify whether any of the assets backing these loans were “crypto” tokens. Many of them have plummeted in value this year and may not be enough to cover the value of his USDT on loan.
Welch also did not disclose whether the Tether loan was made to the parties involved. Tether’s testimony previously stated that the related parties did not hold the loaned USDT, but this detail was omitted earlier this year and Welch declined to provide an explanation for the change.
really into pegging
The WSJ also expressed concern about the $2.6 billion in “other investments” listed in Tether’s latest certificate. This is half of the value quoted for the end of 2021 and likely reflects the dramatic drop in the value of most tokens following the onset of the current “crypto winter”.
Tether claims to have approximately $250 million in assets in excess of the total amount of USDT issued as of September 30, which is a “capital cushion” of approximately 0.4%. However, on May 12, he noted that USDT fell to 1 with the US dollar during periods of market volatility, such as when USDT fell to 1 dollar and he fell to 95.6 cents (up to 92 cents on some exchanges). Known to lose the to-one peg.
That unpegging event, like the others before it, was fairly short. However, if USDT suffers continued losses on the peg, the value of Tether’s USDT-denominated loans will continue to decline until the ‘cushion’ of Tether’s reserves fulfills its obligations while USDT is flooded with redemption demands. means that it is insufficient for
Of course, Tether’s own terms of service state that you must be a “verified customer of Tether” to trade USDT. Even if you are a “Verified” customer, Tether “does not make any representations or warranties as to whether any Tether tokens that may be traded on the Site may be traded on the Site in the future.” Hmm.”
The fact that Tether’s cushion is only $250 million means that the company has diverted most of its reserve assets from a sketchy product that was absolutely worthless commercial paper from a sketchy Chinese real estate company. It’s all the more implausible when you consider what you’ve declared. A solid US Treasury bill.
Short-term Treasury yields have been pathetically low for years, but have now been on a steady upward trend for nearly three years, with 10-year yields currently at a not-so-bad 3.7%. The short-term bonds Tether claims it holds have even higher yields.
Still, Tether now claims to have a T-bill worth just under $40 billion, double the reported total as of September 30, 2021. There appears to be little to no financial benefit from these generous yields. Bloomberg’s October 2021 report, in which he didn’t find a single Wall Street trader he’d heard Tether making a significant purchase of his T-bill, said: It seems that you are working on
Tether has also repeatedly claimed to have been a key investor and managed to pull itself out of all cryptocurrency crashes, such as the Ponzi scheme, which provided close to $1 billion in financing. , so much hogwash.
Excellent…
The WSJ’s report was featured on CNBC’s Squawk Box program on Friday when Tether co-founder Reeve Collins appeared. Host Andrew Sorkin pressed Reeves as to why he was unable to provide the public with a proper, independent, third-party audit of Tether’s reserves.
Reeves claims that Tether provided evidence of its reserves via half-hearted testimony, which he incorrectly characterized as an audit. Pressed by Sorkin whether increased regulatory scrutiny would mean that Tether would be “forced to disclose exactly what underpins these assets,” Reeves said, “How these regulations I will see if it will be,” he said. [currently under discussion in the U.S. Congress] to play.
Reeves, who sold shares in a company he co-founded years ago, went on to insist that “our industry has done an excellent job of self-regulation,” perhaps because he didn’t want to go to jail. . The fact that Reeves was able to say it with a straight face suggests that he and Jon Lovitz may have been separated at birth.
No, you’re fat!
A more pointed response came from Tether’s official site via an untitled blog post. WSJ & CO: Mainstream Media Hypocrisy, Sleeping in Information Circles. The lengthy post actually didn’t mention it until near the end of the WSJ article, to blame all of Tether’s critics for allegedly “sleeping behind the wheel” before the current crypto winter turned into an ice age. , spends most of the copies in progress.
When it finally reached the WSJ, the article claimed that “there were many misunderstandings” regarding Tether’s loan. Tether’s secured loans are highly over-collateralized and even backed by additional Tether equity when required. ”
Also, “price declines in the USDT token are insignificant because these declines only reflect the exchange value and not the redemption value of the underlying collateral.” Even if the depeg persists, the redemption value of the assets pledged as collateral for Tether’s multi-billion dollar loans will likely remain below the book value, as it correctly points out that almost all tokens have suffered significant declines this year. It may not be worth anything close to the price.
martyrdom is delicious
But Tether’s gist of Jeremiad is how the company compares to FTX and its glowing media profile before its heady-headed, helium-voiced CEO Sam Bankman-Fried joined the exchange. It means that you are unfairly selected as the target of criticism. Research filed for bankruptcy protection last month.
Some of that criticism may be fair, but you can find plenty of SBF skepticism on this site long before the current debacle began (as of USDT September 2021).
If anyone seemed willing to treat SBF as a rainbow fart hero, its $36 billion (and Billions or more after that) came from And remember we have to swallow the fiction that Alameda was actually transferring tens of billions of dollars to Tether, despite scant evidence that FTX/Alameda had access to that kind of cash. Put it down please.
Tether’s usual public faces, CTO Paolo Ardoino and general counsel Stuart Hoegner, gave a harrowing interview on CNBC in July 2021, and they have yet to repeat. A spare pair of tethers. But Paolo takes it long enough to explain that Tether big bosses Giancarlo Devasini and Jean-Louis van der Velde didn’t do an interview because they were too busy pampering big customers. was able to summarizeLike Alameda’s then-CEO Sam Trabucco.
We would be remiss if we didn’t point out what Tether’s article cites to support that claim. many A link to an article written by the infamous former CEO of the BitMEX exchange, Arthur Hayes. Feather bird…
BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX, Tether – embraced the digital asset revolution and turned the industry into a minefield for naive (and experienced) players in the market.
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