Why Tether Refused To Help FTX During Crisis

It’s been almost two months since crypto exchange FTX filed for Chapter 11 bankruptcy, but the dark details of what happened during the crisis continue to pop up even today. As per the latest Forbes report, the USDT stablecoin issuer Tether received a call from disgraced FTX founder Sam Bankman-Fried just ahead of filing for bankruptcy.

As we know, SBF was trying to get in touch with every possible contact to stop the FTX ship from sinking. After initial support, even Binance pulled out of the deal in less than 24 hours. Seeing his empire collapse in front of his eyes, SBF reached out to Tether for financial help, said Tether CTO Paolo Ardoino. Although SBF didn’t explicitly mention how much he needed, the USDT-issuer “categorically refused”.

Ardoino said that something was obviously wrong with the request and it was an easy decision for them to say no. In a word with Forbes, the Tether CTO added:

“He suddenly asked for something that he had never asked for before, and he wasn’t talking about $10 million. The way he was talking suggested that he had a big issue. His request was in the billions.”

SBF was doing desperate phone calls in early November to save FTX from imploding but eventually couldn’t succeed.

Bittersweet Moment for Tether

USDT stablecoin issuer Tether has been mired in controversies over its $66 billion reserves. Tether’s USDT stablecoins still grab over 50% share in global Bitcoin trading volumes.

Despite multiple instances of scrutiny, Tether has managed to hold strong through different seasons of market volatility and crypto winters. They have preserved through some of the major market crashes last year in 2022 while catering to the liquidity demands successfully.

During the Terra LUNA collapse, the USDT-issuer faced $16 billion in redemptions from panicked investors. Similarly, they faced $3 billion in redemptions during the FTX collapse. Both times, Tether handled the situation firmly.

Crypto exchange FTX was one of the biggest partners of Tether. However, unlike SBF’s involvement in all behind-the-curtain activities and colluding with politicians, Tether has successfully managed to defy regulatory scrutiny. However, one major question in crypto investors’ minds is why doesn’t the stablecoin issuer publish the USDT reserves report.