According to the latest assurance report provided by accounting firm MHA Cayman, Tether’s USDT stablecoin is fully backed. The firm found that Tether has a net worth of at least $82,424,821,101, while its total liabilities (including issued stablecoins) are $82,262,430,079.
Tether stock status
The figures in the report match Tether’s unaudited Consolidated Reserves Report (CRR) as of March 31, 2022. This ensures that Tether’s USDT stablecoin – the largest stablecoin available by market cap – is in fact fully backed.
Stablecoins are the value of cryptocurrencies that have traditionally been pegged to “stable” fiat currencies, such as the US dollar. For a stablecoin to function, it must be redeemed for an asset of equivalent value at all times. Therefore, holders must rely on stablecoin issuers such as Tether to maintain a large and liquid pool of assets in order to easily compensate their clients.
As Tether announced on Thursday, the nature of these reserves has changed significantly over the past few months. The company’s commercial paper holdings declined from $24.2 billion to $20 billion from the previous quarter, while its US Treasury bills rose to $39.2 billion.
MHA Cayman clarified that its valuation was not attributable to Tether’s reserve balance and activity before or after March 31. It was also noted that Tether is currently a defendant in two ongoing legal cases, with results pending.
Fears About Tether’s Holdings
In October 2021, Bloomberg reporter Zeke Fox claimed that a significant portion of Tether’s reserves were held in Chinese commercial paper, which is generally considered unreliable. Tether’s attorney countered that most of its holdings were high grades from credit-rating firms. The company later dismissed the same story as “old news with dubious sources”.
Nevertheless, the credibility of Tether’s reserves has been questioned for many years. The company declined to provide details on the counterparties to its commercial paper holdings due to “privacy concerns.”
These concerns have landed the company in trouble with the public and private sectors alike. In October, Hindenburg Research posted a claimable $1 billion bounty by anyone who found Tether’s reserves. During the same month, the CFTC forced Tether and Bitfinex to pay $42.5 million in fines for “missing material fact with respect to the USDT token USDT.”
Tether Thrives, Terra Dies
Despite such fears, USDT has retracted its peg strongly against the dollar following widespread uncertainty that rocked the stablecoin market this month. TeraUSD (UST) – the former third-largest stablecoin – completely fell off the peg and lost trust with investors, thanks to the exploitation of loopholes within its reserve system.
Unlike Tether, UST was an algorithmic stablecoin, backed programmatically through the burning and mining of the LUNA Governance token. However, volatility and ease of production eventually led to a total devaluation of the coin, therefore destroying the credibility of the UST.
Similar to Tether, Terra co-founder Do Kwon also faces legal pressure from affected South Korean investors and the government.
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