Tether’s Reserves, Publisher of the Popular USDT stablecoin, remains a controversial topic that keeps coming up. Now a certain Zeke Faux of Bloomberg claims that he has re-examined these reserves.
NEW: If the trolls are right, and Tether is a Ponzi scheme, it would be larger than Bernie Madoff’s. So we set out to solve the mystery.
Read The Big Take via @BW ⬇️ https://t.co/LYpHtWzMeh
— Bloomberg Crypto (@crypto) October 7, 2021
However, the story seems to be mainly a rumination of old fear, uncertainty & doubt (FUD) about Tether. It’s a remarkable anti-cryptocurrency story that quickly shows that the author has done no real research.
Faux claims that if everyone has a bank run would make on Tether, the company would collapse. With a market cap of as much as $69 billion, that could also have a huge impact on the mainstream market:
“The losses could end up in the regulated financial system by crashing the credit markets. If the trolls are right and Tether is a Ponzi scheme, it would be bigger than Bernie Madoff’s.”
There is, however, a striking novelty in the story. According to the investigation, Tether has lent billions of dollars to crypto companies, using bitcoin (BTC) as collateral.
One of these companies is Celsius Network, a crypto lending company, which received multiple warnings from US regulators about its loan product this summer. CEO Alex Mashinsky tells Bloomberg that Celsius is paying 5-6% interest to Tether on the loan.
Also, Tether’s reserves are said to consist of billions of dollars of loans from major Chinese companies. It is not clear who these are and how much this concerns, but that is of course the core of the problem with these reserves.
Tether attorney Stuart Hoegner says the report is “nothing more than a collection of innuendo and misinformation from individuals with no involvement or knowledge of the company’s operations.” Tether also immediately published a statement in which Hoegner’s statements are repeated:
Tether dismisses Bloomberg story as old news with dubious sources ⬇️https://t.co/7R6ezwpBwp
— Tether (@Tether_to) October 7, 2021