Tether alleges that the Wall Street Journal has spread false information about its reserve composition and business profitability.
The statement claims the WSJ’s criticism of Tether’s use of three months’ worth of T-bills as a reserve asset is unfounded since U.S. Treasuries have been a safe-haven asset globally for many years. As Fortune confirms, U.S. Treasuries are considered almost as safe and as liquid as the U.S. dollar, backing up Tether’s claims.
Tether also refutes the WSJ thesis that hedge funds betting on Tether’s collapse threaten the stablecoin’s liquidity, saying that such a thesis comes from a “fundamental misunderstanding” of Tether and the cryptocurrency market.
Transparency war in full swing
Tether issues the stablecoin USDT, a cryptocurrency pegged to a reserve of underlying assets to minimize price movement. Unlike banks, regulators have been relatively lax regarding the level of disclosure stablecoin issuers must make regarding their reserve compositions. However, the recent collapse of the TerraUSD stablecoin has brought stablecoin reserve compositions under scrutiny, with Tether being no exception.
The Financial Times reported that Tether’s stablecoin briefly lost its peg to the U.S. dollar on May 12, 2022, as holders of USDT redeemed more than $10 billion worth of USDT. Despite reassurances by Tether’s CTO that the company had enough liquidity to honor $10 billion worth of redemptions, investors shaken by TerraUSD’s collapse demanded more.
A transparency war between stablecoin issuers ensued. While no international accounting standards exist for digital assets, issuers have nevertheless resorted to reports called attestations that detail the composition of their reserves. Tether claims that the WSJ’s assertions that other stablecoin issuers have been audited are false and that it has been open about its asset composition,
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