Tether condemns Wall Street Journal: Always creating USDT panic, have they issued warnings about FTX, 3AC, and Terra too?

USDT, the stablecoin with the highest circulation, has always been controversial and has been questioned over the years for its transparency of reserves and redemption risks. However, it has withstood large-scale redemptions in several major market storms and has increased reserve transparency. Recently, The Wall Street Journal once again questioned Tether's ability to withstand redemptions with the headline "Rising Tether Loans Add Risk to Stablecoin Crypto World." Various media outlets have also started to hype this issue, while Tether has strongly condemned the allegations.

Quick Overview of the Tether Loan Issue

The Wall Street Journal's argument is that 9.02% of the reserves of USDT are secured loans, totaling approximately $6.1 billion, but they did not disclose what the collateral is, nor did they explain whether these loans were issued by USDT, lacking transparency. At the same time, The Wall Street Journal believes that this does not align with Tether's claim that new issuances of USDT should occur upon customer requests and purchases.

Tether spokesperson Alex Welch responded in the report that these loans are short-term loans of highly overcollateralized liquid assets and they continuously monitor the collateral value. The borrowers are also entities with no affiliation, but they are not willing to disclose the contents of the collateral.

The Wall Street Journal thus questions Tether's ability to withstand a run on the bank.

More details: WSJ Claims Tether's Loans Increase Risk, Official Response: Misunderstanding of Operations

Tether Condemns: Blaming Us for Market Downturn, Why No Early Warning from FTX?

"How many of Tether's usual critics have warned FTX, Alameda, BlockFi, Genesis, Celsius, 3AC, or Terra? Can anyone name a few?"

Tether stated that some individuals focus on eliminating bad actors to protect investors, have they investigated these entities in detail like they have investigated Tether? Tether criticized whether these commentators and media outlets, who have long investigated and warned that Tether will fail, but turn a blind eye to regulatory arbitrage, fraud, and irresponsible leverage behavior in the crypto industry, are truly trustworthy.

"Every time the market falls more than 15%, they start claiming Tether will collapse, completely ignoring the structural errors that have destroyed billions of assets." Tether's announcement stated.

Tether Responds: USDT Drop Reflects Exchange Value, Collateral Value is Key

Tether believes that The Wall Street Journal fundamentally misunderstands the situation, as the loans are highly overcollateralized and can even be supported by Tether's capital when necessary; furthermore, 82.45% of Tether's total reserves are in U.S. Treasury bonds and other cash equivalents, with the current yield on Treasury bonds at historical highs.

Tether stated that The Wall Street Journal claims the value of the loan collateral is priced in USDT, so a drop in USDT would also pose a risk to Tether, which is a complete misunderstanding of the situation. In reality, the temporary drop in USDT is just the trading price of USDT on a given day, and what matters is the redemption value of the collateral.

Tether explained that their lending policy is very conservative, and the method of adding additional margin for overcollateralization is also very efficient.

Tether: Profitable and Professionally Managing Reserves

Tether claims to professionally manage its reserves, ensuring redemption for users, and transparency in reserve reporting. Currently, the top five auditing firms provide audit proof.

Tether also emphasized that its business is profitable, thus even in critical situations, it has the ability to make payments, will not gamble with customer funds, and will not use a fractional reserve mechanism.

Further Criticism of DCG, Circle, and FTX

Tether also took the opportunity to criticize its biggest competitors, Circle, and the once media favorite, FTX.

Tether stated that DCG is an investor in Circle, and Genesis, an institutional lending platform under DCG, recently experienced bad debt due to the FTX incident and even suspended withdrawals. Note: Genesis also provides services for Circle's interest product, Circle Yield, resulting in a $2.6 million outstanding loan

Tether also mentioned issues related to entities under the DCG group, such as Grayscale's GBTC, Genesis, an institutional lending platform, and the media outlet CoinDesk. They believe that GBTC is critical to the failure of Blockfi and 3AC's arbitrage, Genesis is key to FTX's collapse Note: SBF mentioned in an interview, and CoinDesk has no opinion column on DCG in discussing these matters.

Tether believes that if the media is controlled to conceal potential shady behavior, it is surreal and dirty.

Tether also stated that FTX's situation does not qualify as a "bank run" because crypto exchanges should protect user deposits rather than lend them to affiliated companies for investment purposes. Moreover, they not only lend out user assets but also fail to recover loans in a timely manner. This is a failure to fulfill the management responsibilities of an organization. They believe that the media's portrayal is either due to ignorance or a form of political cover-up.