After backlash from a major media house, Tether hit back at media FUD regarding rising loan risk with a blog post “WSJ & CO: The Hypocrisy of Mainstream Media, Asleep at the Wheel of Information.”
The issue surfaced when the Wall Street Journal published a report targeted at Tether, claiming that the company has “increasingly been lending its own coin to customers rather than selling them for hard currency upfront.”
It further emphasized that these loans add the risk that the company may not have sufficient liquid assets to pay redemptions in a crisis. Tether responded with a lengthy rant on how mainstream media has failed in predicting the demise of major crypto platforms but kept on targeting Tether.
WSJ backed its claim by saying that it has examined Tether’s financial reports which evidence these loans. The latest report indicates they reached $6.1 billion as of Sept. 30 which equated to 9% of the company’s assets.
Tether has not denied that these secured loans were real. On the other hand, WSJ stands firm on its claim that Tether’s loans of USDT were denominated in USDT, and the company was exposed to a decline in the value of the stablecoin.
Tether argued that WSJ completely misses the point and mistakes the USDT itself for the collateral that underpins it. It also stated that Tether’s secured loans are extremely over-collateralized and even backstopped by Tether’s additional equity if needed.
The firm added that the equity is growing at a fast pace and around 82.45% of total Tether reserves are in “U.S. Treasuries and other cash equivalents whose yields are at multi-year highs.” It explained that Tether always requires wide over collateralization by extremely liquid assets.
In its blog Tether taunted the media outlet, “Tether is profitable and will remain solvent even in critical scenarios. Tether is not gambling clients money but is and has been accurately managing its reserves and does not apply fractional reserve.“
This is not the first time when Tether has thrown punches at the media. Last month, Tether accused Bloomberg of Fishing age-old news for headlines.
