0.3% Drop In Tether’s assets could Wreck The Market: WSJ Journalists

Jean Eaglesham and Vicky Ge of the Wall Street Journal (WSJ) revealed that Tether has a tiny difference between its assets value and liability value. They added that such little cushion could wreck the market if its assets’ value should drop below its liabilities even by 0.3%.

WSJ Journalists Says Tether Has A Tiny Equity Cushion

According to reports, Eaglesham and Huang expressed their opinion on Tether’s assets reserve in their column in WSJ. The two journalists reportedly stated that a 0.3% drop in Tether’s reserve assets could cause catastrophe in the market.

In the column, which surfaced on Saturday, Eaglesham and Huang highlight the foggy nature of USDT reserves. They stated that the status of the network’s reserve could deplete investors’ confidence in the network. 

Currently, the difference between Tether’s reserve and liabilities is just about $192 million, according to Tether’s price statistics. Furthermore, it has about $67.75 billion in its assets reserve and about $67.54 billion as liabilities.

Responding to the journalists’ observations, Paolo Ardoino, CTO at Tether, assured them that the network expects massive asset growth soon. He continued that the network is not in any form at the risk of technical insolvency as they have no difficulty rolling out customers’ funds. 

Ardoino mentioned that the network recently paid out about $7B without issues despite the overall bear market. In addition, Tether shows a complete breakdown of its assets on its websites. 

According to the stats, Tether’s reserve consists of about 79.62% cash derivatives and has loans worth 6.77%. Also, bonds, equities, and some treasure metals occupied 5.25% of the reserve. However, the remaining 8.36%, worth about $5.60 billion of the total reserve, is in undisclosed cryptos. 

Tether Has A Foggy Reserve Assets Status

During his statements, Ardoino reportedly skipped comments requesting disclosure of the unidentified crypto investment in the reserve. Over the years, Tether reserve’s foggy nature has always been a topic of discussion in the industry for years. 

That is because Tether has significant market dominance and has sued many firms that misjudged its reserve status in the past.

Furthermore, the network is under obligation to publicly audit its assets every four months. 

The Attorney General Department of New York placed the network under the obligation in February 2021. The obligation includes a proper breakdown of the network’s assets in cash, equities, and others to improve the network’s transparency.

Additionally, Ardoino included in his response to WSJ that the firm plans to turn the quarterly audits monthly. He claimed that the action would help them to be more transparent in their operations.

According to reports, Tether recently partnered with an audit expert firm, BDO Italia, as it aims to conduct personal auditing soon. Overall, the firm is trying all it can to improve its operational transparency further. Nonetheless, there is no complete audit that gives a full scope into the financial assets that Tether holds at the moment.

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