Tether is back again with criticism of the mainstream media, which has once again called out the stablecoin provider for having potentially unreliable reserves.
In response to the “recent cycle of Tether FUD,” the company has promised to reduce the secured loans in its reserves to zero by the end of 2023.
What’s the FUD About?
Earlier this month, the Wall Street Journal called out Tether for its “secured loans” – whereby Tether lends out its own stablecoin tokens rather than selling them upfront for hard currency. According to the company’s website, these loans comprised $6.1 billion, or 9%, of its reserves as of September 30th.
While Tether claims these loans are overcollateralized by “extremely liquid” assets, it gives few details about the exact nature of that collateral, and who its borrowers are. WSJ used this angle to suggest that these loans create risks for the company to continue satisfying stablecoin redemptions.
“Tether can’t be certain the loans will be paid back, that it could sell the loans to a buyer for dollars in a pinch or that the collateral it holds will be adequate,” wrote the company.
Tether’s generalized response, written on Tuesday, dismissed criticisms of its secured loans as more “disinformation” concocted by “Tether truthers” and the mainstream media (MSM). Nevertheless, in a commitment to restoring faith in crypto following the collapse of FTX, it has decided to entirely sell them off in 2023.
“Tether is professionally and conservatively managed and this will be demonstrated once again by successfully winding down the lending business without losses (since all loans are over-collateralized by liquid assets),” wrote Tether.
The company reviewed a series of other ways in which the MSM has been “wrong” about Tether, including suspicions that its held 70% of its reserves with Evergrande, and that the commercial paper held in its reserves was unreliable. In October, Tether confirmed that its commercial paper holdings had been entirely sold off.
Skepticism Running Rampant
With the downfall of multiple major industry players like Celsius, FTX, and Alameda, members of the crypto community are turning against one another with theories about who will go down next.
Panic swelled on Twitter on Tuesday as Binance struggled to process billions of dollars worth off withdrawals – particularly those denominated in USDC. Its CEO, Chanpeng Zhao (CZ), has assured any withdrawal delays are simply due to the need to swap BUSD into USDC, which has now been done.
Speaking of USDC: The popular Bitcoiner and economic journalist Max Keiser theorized last week that Circle will be the next big player to fall.
“Circle pays people to use [USDC] & as such they are on the verge of bankruptcy, whereas with Tether, they don’t pay anyone to use [USDT],” he said on Friday.
CZ has even shown skepticism of Coinbase in recent weeks over how much Bitcoin it claims to hold on behalf of Grayscale. However, the CEO quickly retracted doubtful claims after having a look at Coinbase’s audited financials.