In a rebuttal to recent concerns raised by The Wall Street Journal (WSJ) on its lending practices, Tether has refuted claims regarding its USDT lending and reinforced its position on the overall safety and transparency of its operations.
Tether, the most dominant stablecoin issuer, had previously indicated its intent to curtail stablecoin loans, aiming for a zero balance by the end of 2023. However, a slight uptick in these loans, reportedly at the behest of its long-time partners, has thrown this declaration under the bus, with data showing a rise from $5.3 billion to $5.5 billion in just one quarter.
The lending model of the company, where customers can borrow USDT in exchange for collateral, has been subject to scrutiny several times in the past, especially due to perceived opacity surrounding the collateral’s nature and the identity of the borrowers. Notably, a December 2022 report by WSJ suggested potential undercollateralization of these loans, causing apprehension about Tether’s redemption capabilities during a potential financial crunch.
Tether, however, had confronted these claims head-on, branding them as mere “FUD” (Fear, Uncertainty, and Doubt) and asserting that the loans were over-collateralized. In the backdrop of these controversies, it’s worth noting the company’s remarkable fiscal performance. September data revealed a whopping $3.3 billion in surplus reserves, reflecting a significant leap from a mere $250 million the previous year.
Tether Responds To The Allegations
Responding to WSJ’s recent article, Tether issued a sharp statement, underscoring the challenges plaguing traditional banking and criticizing the media outlet for seemingly disregarding these issues.
“The banking industry is facing significant challenges and has proven incapable of keeping up with evolving global financial markets, something the Wall Street Journal has disregarded countless times in pursuit of tarnishing the reputation of true innovators like Tether,” the statement read.
Highlighting its commitment to customers, Tether mentioned its impressive $3.3 billion excess reserves, hinting at its strength and preparedness to counter any financial adversities.
The statement further elaborated, “Anyone with a minimum understanding of financial markets would see how a company having $3.3 billion in excess equity and on track to make a yearly profit of $4 billion is in all effects offsetting the secured loans and retaining such profits within the company balance sheet. Tether is still committed to removing the secured loans from its reserves.”
Moreover, Tether highlighted that the discourse accentuates the complexities inherent in the stablecoin ecosystem, underscoring the necessity for a more intricate grasp of their operations. The firm also accused the WSJ of spreading misinformation, suggesting that some might be pandering to vested interests, questioning if this criticism is an attempt to “manipulate tabloid-style reporting to appease their ‘friends’ entrenched in the old guard.”
At press time, the Bitcoin price saw a slight drop today, falling 1.5% within the last 24 hours.
