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Stablecoin Issuer Tether Dismisses Wall Street Journal's Claim of Inadequate Reserves
The newspaper reported that the firm's assets outweigh its liabilities by just $191 million, implying a relatively "thin cushion of equity."
Updated May 11, 2023, 4:18 p.m. Published Aug 30, 2022, 11:53 a.m.
Stablecoin issuer Tether has refuted claims made in a Wall Street Journal report in relation to uncertainty over its balance sheet.
In an announcement on the company's website Tuesday, Tether said that U.S. Treasury bills have been the premier safe asset for decades in response to the Journal's claim that the company has a "thin cushion of equity."
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The report said that Tether's assets, which were $67.7 billion on Aug. 25 according to an attestation by accountancy firm BDO, outweigh its liabilities by just $191 million, meaning that a mere 0.3% slump in assets could result in "technical insolvency."
Tether also insists that it is the most honest and transparent stablecoin issuer in the market, promising that it will provide monthly attestations starting in January in spite of criticism over the lack of a formal audit.
Stablecoins have fallen under scrutiny by both regulators and investors this year following the collapse of algorithmic stablecoin terraUSD (UST) that saw $18 billion in market cap evaporate. Terra's demise led to a period of crypto contagion that saw crypto companies Celsius Network, Voyager Digital and Three Arrows Capital all file for bankruptcy in the following months.
Tether's price momentarily dropped to 95 cents in May as fears over the viability of stablecoins intensified.
In June, it was reported that hedge funds were shorting position in tether worth hundreds of millions of dollars, but the stablecoin issuer refuted those claims.
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The issuer behind the most popular stablecoin said that if the bid succeeds, it prepares to invest $1 billion in the football club.
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