Tether nearly bankrupt, USDT barely covered, says WSJ

At the root of the crypto industry is one company that has a controversial but influential background: Tether. According to critics, this company forms a very weak foundation for the dollar stablecoin USDT. The Wall Street Journal claims that Tether is practically bankrupt, leaving the crypto market on the brink of collapse.

YOUSDT is crypto’s backbone

The stablecoin issuer provides the vast majority of liquidity in the market via USDT, and thus indirectly the prices of cryptocurrencies. Even though USDT’s market value has fallen by about 20% in recent months, it is still the largest stablecoin by some distance.

In fact, USDT is the backbone of the entire crypto market. You can purchase other cryptocurrencies with USDT on many exchanges. Without this coin, you can’t even start anything on some trading platforms. If USDT were to disappear as a source of liquidity, the prices of many tokens would plummet almost immediately.

Tether weaker than thought?

But The Wall Street Journal thinks the situation is worse than many crypto investors think. Tether would even be on the verge of bankruptcy. If USDT’s collateral were to fall just 0.3%, USDT would no longer be fully covered. Tether appears to have sold many risky assets at a rapid pace in recent months, including corporate bonds.

However, according to the business newspaper, this is not nearly enough. At the time of writing, Tether itself has in their own words $67.5 billion in liabilities, and $67.7 billion in assets. So there is indeed very little room for declines.

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In recent months, Tether’s board has been working hard to maintain confidence in USDT, including by being a little more transparent about what the token’s reserves look like. They are now also on his website. It turns out not only has corporate bonds, but also cryptocurrencies.

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