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According to a recent report, Tether, the issuer of the USDT stablecoin, has been increasingly lending its own coins to customers rather than selling them for cash. Further, it also states that, the crypto giant has failed to disclose its stablecoin-issued loans and raised concerns about why Tether doesn’t publish its full USDT reserves for transparency.
Tether Responds To USDT Charges
The filing for Chapter 11 bankruptcy earlier this month by one of the largest cryptocurrency exchanges, FTX, has given rise to these fears. It’s believed that the subsequent market decline might have dented and diluted Tether’s collateral.
Weighing in on the situation, Tether’s cofounder, Reeve Collins, responded to the allegations on CNBC’s latest episode of SquawkBox.
In defense, Reeve states that, the company published its proof-of-reserves on the official website and that anyone could check them out and validate them. Additionally, Tether undergoes audits every few months for government authorities to understand how the funds are being managed and invested.
Read More: Tether Discloses Asset Reserves Figures
According to Reeves, in the last 8 years, in Tether’s operational history, “it always redeemed every token for exactly $1”. He further went on to state that:
“I sold the company at the end of 2015, and the principles continue to operate that and in my opinion, to the absolute best of their ability, [along] with the best risk mitigation tactics in the industry. It has withstood the test of time.”
Reeves believes that even though these questions have been answered already, they are “okay” and with time the industry is going to be “more and more transparent, due to the failures of FTX and BlockFi”.
Tether’s Uncertainty After FTX Fiasco
The regulators and Tether have a long history of conflict. Even during the Terra Luna crisis and the 3AC-led market collapse, doubts about Tether’s reserves began to surface.
Read More: Everything About 3AC’s Insolvency Risks & What Happened
The FTX bankruptcy has once again rekindled concerns about the top stablecoin by market capitalization, particularly in light of information concerning the function of the FTX token, FTT, that the firm might have excessive leverage on.
That said, USDT also lost its dollar peg briefly following the contagion.
Read More: FTX-Tether Connection: Involvement Of Banks Raises Questions
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