Forbes Goes Inside Tether, Stablecoins
Forbes writes, "Inside Tether, Crypto's (So Far) Unbreakable Buck," which says, "Amid crypto's existential crisis, its largest liquidity provider, Tether, has withstood multiple multibillion-dollar redemption runs. Will competition from rival stablecoins like USDC and regulatory pressure force Tether to finally come clean?" The piece comments, "FTX and Alameda were big customers of Tether. To date Bankman-Fried had already minted $36 billion worth of its U.S. dollar based stablecoin USDT, almost half of the total amount created. 'He contacted us and asked for economic help,' says Ardoino. 'He didn't disclose details or exactly how much he needed, but we categorically refused.'" Forbes writes, "For Tether, the controversial company behind the $66 billion stablecoin USDT, used in more than 50 percent of all bitcoin trading worldwide, Bankman-Fried's demise was bittersweet. FTX was Tether's largest customer, but unlike Bankman-Fried who cultivated the media and hobnobbed with politicians, Tether has defiantly resisted regulatory scrutiny and is a constant source of media scorn. But through crypto's tumultuous 2022, Tether has persevered. In May, when TerraUSD, crypto's then third largest stablecoin and its sister token LUNA, accounting for $45 billion in market value, suddenly collapsed, Tether was faced with $16 billion in redemptions from panicky crypto investors. While USDT dipped to as low as 95 cents during the panic selling, it met its redemptions and bounced back to full value within a week. During FTX's more recent collapse some $3 billion in redemptions flooded in over the course of a few days, but Tether barely missed a beat. All of the redemptions were met 1:1 in US dollars." It adds, "While Tether has so far proven its staying power in the marketplace, the stablecoin provider has yet to gain trust outside of crypto.... The company has never produced an audit and it refuses to disclose the exact mix of its collateral, which includes crypto tokens, loans, and other illiquid investments. By comparison its closest competitor USD Coin, run by Boston-based Circle Financial, publishes the specific Treasury securities, CUSIPs and maturity dates that support its $45 billion digital dollar. But if crypto survives the current brutal winter, Tether, its dominant liquidity provider, must grow up. That is why Tether has recently been on a campaign to clean up its image. Long accused of padding its balance sheet with questionable commercial paper, in June 2022 it pledged to eliminate all of what was once $30 billion of the asset from its reserves and put most of that into US Treasury bills and other cash equivalents. Then in August it hired top five accounting firm BDO with the goal of undergoing a full audit. Last Tuesday the company announced that it will stop lending out USDTs -- whose loans amount to 9% of its assets -- by the end of 2023."
