The current problems will seem pathetic: Can USDT really go bust?

The popular stablecoin Tether (USDT) is once again under the radar of journalists. According to The Wall Street Journal, the reserves of Tether are in a dangerous state, and a slight drawdown of assets cost can be enough to make the bankruptcy of Tether real. As if confirming the publication’s words, Tether is postponing its next audit of reserves. We collected all the hot news around USDT in one article.

Fragile Equilibrium

In a recent investigation, The Wall Street Journal made a pretty strong statement — Tether’s reserves are in such a fragile state that a drop of even 0.3% in the value of its collateral assets could make the company technically insolvent.

Considering that USDT is the undisputed leader in the stablecoin market and has an extremely wide circulation in the crypto industry, such a fall of the giant would cause huge problems, compared to which the current crypto winter will seem like a pathetic misunderstanding.

The second part of the news is that Tether is once again postponing an audit of its reserves, this time because of alleged “serious market fluctuations.” The company has repeatedly promised a full audit of its stablecoin reserves for more than five years, but no independent audit has ever been conducted.

New Tether Report

A new information attack against Tether came in the background of a new official report from the company on the state of its affairs.

Tether published a fresh report about USDT stablecoin reserves, according to which all tokens are 100% backed by highly liquid securities or fiat assets — the share of US Treasury bills is equivalent to $28.9 billion, and the share of cash and bank deposits is only $5.4 billion.

Moreover, Tether intends to change the order of release of such reports and publish them on a monthly rather than quarterly basis, as they did before.

What does it all mean?

Tether has already responded to the WSJ that all the data is misinformation.

First, according to Tether, they already have an auditor. It is BDO-Italia (internationally, this auditor is known as BDO Global). Secondly, as for the WSJ’s calculations of their reserve assets, they are, according to Tether, not entirely correct. It is also denied that Tether’s business is allegedly not profitable (according to WSJ’s own interpretation of previous reports).

In its press release, Tether states:

“The article seeks to discredit the work that Tether has put into transparent and honest communication to the public. BDO, a very reputable and independent Top 5 audit firm, is not a ‘Tether accounting firm.'”

Independent observers note two important circumstantial points that provide food for thought about what is happening:

• Tether’s opponents point out that despite the alleged defamation (quite sensitive for the reputation of this type of business), the accused company is not suing, which is a sign of weakness of its defense.
• On the other hand, Tether’s defenders argue that the company is being targeted by FUD — in recent years users have been systematically scared of the company’s collapse, but nevertheless, this stablecoin is still the most popular on the market. In their opinion, such information attacks are an attempt to manipulate the market through FUD pressure, which has been repeated many times (and always with exactly the same reasoning).