Tether flip-flops? Originally planned to clear its loan guarantees this year, it then lends out a $200 million short-term loan.

The Wall Street Journal revealed that Tether has resumed its loan service within less than a year after announcing the cancellation of its collateralized loans. This news was also confirmed by a spokesperson for Tether Holdings. In response, Tether officially criticized The Wall Street Journal, stating that the media outlet is as old-fashioned as traditional finance and unable to keep up with the pace of innovation.

Tether Resumes Offering Collateralized Loan Services

The Wall Street Journal obtained Tether's third-quarter financial report, which revealed that as of June 30, the assets included $5.5 billion in loans, exceeding the second quarter by $200 million, and a spokesperson confirmed the issuance of new loans.

Tether Holdings spokesperson Alex Welch stated:

"In the second quarter of this year, we received requests from some long-term clients, which is why we decided to meet their short-term loan needs. The collateralized loans will be cleared by 2024. Our goal is to prevent clients from depleting liquidity and potentially suffering losses by selling collateral at unfavorable prices."

Review of concerns in Tether Q2 financial report: Breaking down the financial report: Tether's profits decline, confusing the audience with different indicators

Unclear Collateralized Loan Mechanism, Risks Exist?

The Wall Street Journal pointed out that Tether, registered in the British Virgin Islands, rarely discloses information about borrowers' collateral for the collateralized loan service or the related information of collateral accepted by Tether.

Spokesperson Alex Welch refused to explain why clients might sell collateral at unfavorable prices and also declined to disclose whether new loans were used to help clients evade existing loan defaults.

The Wall Street Journal: Tether's Collateralized Loans Are More Profitable Than Bonds

The Tether Q2 financial report shows that the reserves are mainly in cash and cash equivalents, accounting for 85%, with USDT collateral assets supported by U.S. bonds reaching approximately $72.5 billion.

Although Tether can earn interest through U.S. bonds, the interest rates may be far lower than the interest charged to borrowers for collateralized loans by Tether.

Collateralized loans may be more profitable but come with greater risks. Apart from the uncertainty of whether borrowers can repay on time, due to Tether not disclosing relevant information, it is impossible to know if there is indeed over-collateralization as claimed by the spokesperson, or what assets are used for collateralized borrowing.

Tether: Media and Financial Institutions Unable to Keep Up with the Times

Following the release of The Wall Street Journal report, Tether immediately issued a new announcement in response.

The essence of Tether's statement is to emphasize that The Wall Street Journal's report was deliberately written to mislead about Tether's security to appease their traditional financial friends.

The announcement mentioned:

"The banking industry is facing significant challenges, traditional financial institutions are unable to keep up with global financial changes, and cannot meet customer needs in a way that 'benefits economic prosperity.' The Wall Street Journal continues to ignore these facts and instead wastes time scrutinizing Tether."

Tether emphasizes that they have over $33 billion in excess reserves and are expected to achieve $4 billion in annual profits, thus effectively reducing loan risks.

Tether reiterated its commitment to clearing all collateralized loans.