An article in the Wall Street Journal (WSJ) drew attention to an altcoin project. The balance sheet of Tether behind the popular stablecoin USDT was mentioned. He claimed that even a 0.3 percent drop in the value of reserve assets was in a position to “technically bankrupt Tether.” Here are the details…
WSJ report draws attention to altcoin and stablecoin USDT
In an August 27 report, WSJ journalists Jean Eaglesham and Vicky Ge Huang mentioned Tether. Rather, he pointed to the volatile nature of USDT reserves. He focused on his long-awaited audit, which has been running since 2017. Eaglesham and Huang noted the possibility that Tether’s liabilities outweigh its assets. He suggested that even such a subtle situation could cause turmoil in the market. The authors used the following statements:
A 0.3 percent drop in assets could technically bankrupt Tether. A development that skeptics have warned could dampen investor confidence and lead to an increase in redemptions.
Tether has assets worth $67.74 billion at the time of this writing. He also has $67.54 billion worth of debt. That makes a difference of just $191 million, according to Tether’s website. However, Tether CTO Paolo Ardoino said he expects his capital to “grow significantly over the next few months.” He downplayed the severity of Tether’s narrow margins and added the following:
I don’t think we are at systemic risk in crypto.
Ardoino: We do not have any problems
Ardoino also pointed out that the firm does not have any problems using customer funds. They used $7 billion in just 24 hours during the recent crypto crash. Tether’s website states that currently 79.62 percent of its reserves are backed by cash, cash equivalents, short-term deposits and commercial papers. The remaining 8.36 percent consists of unspecified digital tokens. 6.77 percent is secured loans and 5.25 percent is made up of corporate bonds. Other investments, including funds and precious metals, are also in the reserves.
However, Ardoino did not comment on what Tether’s roughly $5.6 billion other investments were. The nature of Tether’s reserves, the stablecoin’s market dominance, and the firm’s claim that it has made false statements regarding Tether’s support in the past are also key points in the Tether ecosystem. Given their relationship with regulators, the reserve issue is a longstanding problem in the crypto space. As we reported on cryptokoin.com, Tether is legally required to publish quarterly reports on its cash and non-cash reserves as part of a $18.5 million settlement with the New York Attorney General’s Office in February 2021.
Ardonio also said it will soon move to monthly reports as part of its effort to provide greater transparency. Earlier this month, Tether struck a new deal for reporting transparency by conducting independent attestations. Signed a deal with the major accounting firm BDO Italia. However, a full audit has yet to be made of the firm, which will further deepen Tether’s finances and provide the full scope of its operations.
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