Last week, as the fallout of the FTX saga continued, massive FUD (fear, uncertainty, doubt) was also spreading in the crypto space over Tether’s USDT, with rumours circulating that Tether was 70% owned by FTX, which was a complete misinformation. While FTX was one out of many market makers like any other exchange that routinely bought and sold USDT to aid in providing liquidity for their own exchange, Tether had zero exposure to FTX and had this made known very early. Regardless, the rumour sent the USDT peg to fall to $0.95 at one point, but recovered very quickly after Tether’s CTO, Paolo Ardoino, came out promptly to quell such unfounded rumors.
This was not the first time that Tether had been attacked. In May, accusation that Tether may not have enough reserves to pay all redemptions hit the ground post the LUNA debacle, which sent the USDT peg to drop to $0.85 before recovering after the company revealed information that proved otherwise. As a result of such constant attacks, the team at Tether have been getting more active on social media to routinely post their asset attestations, which is already updated daily on their website, but somehow not been picked up by FUD spreaders. The team has also been very quick to squash any negative rumours about them.
Furthermore, the team at Tether had been keeping their promises, when it said that they would reduce their exposure to commercial paper earlier in the year, they fulfilled their promise, much to the joy of crypto market watchers.
Ethereum Founder Vitalik Impressed by Team Tether
The recent quick and responsible actions of the Tether team had not gone unnoticed. Vitalik Buterin, the well-respected founder of Ethereum, even took to twitter to express his newfound belief in the stablecoin.
As clueless people continued to make memes out of a potential collapse of Tether, Vitalik replied in Tether’s defence that the team has thus far exceeded his expectations.
Vitalik was never a fan of Tether up to this point and had been openly critical of the company in the past. Thus, his endorsement at this time is an important achievement for team Tether.
Tether Is Hard To Take Down
After Vitalik’s positive comment, on November 11, in the midst of the crypto market mayhem when fear was at a high, seemingly to quash baseless attacks on Tether again, Paolo posted Tether’s latest periodic attestation report by top 5 accounting firm BDO on twitter, which put a stop to more attacks on the USDT stablecoin. According to the latest report, Tether increased the share of cash and its equivalents reserves for USDT to a historical high of 82.4%, which translates into around $40 billion.
This high cash holding drew the praise of yet another Ethereum veteran, Mikko Ohtamaa, CEO and co-founder of Trading Strategy and former LocalBitcoins CTO, who warned that people should think twice before attempting to coordinate a “shorting” attack on USDT as it would take a tremendous amount of money to force Tether into a liquidity crunch, i.e. at least more than $40 billion. Mikko stressed that in 2022, there are no whales that can short USDT to make its issuer, Tether, collapse as its well structured portfolio of reserves makes the entire system sustainable. Mikko further explained that in a nascent market like crypto, attaining full transparency takes time as firms need time to devise ways to show transparency in new ways that did not exist before.
Crypto Veterans Prefer Tether
Another crypto veteran, crypto educator Brad Mills, also commented that Tether’s USDT looks so sustainable for him that a prolonged depegging from the USD price is next to impossible.
Brad explained that the brief depeg of the USDT on November 10 was a result of a failed coordinated attack by an Alameda related address which started to heavily short the USDT through decentralized platforms like Curve and AAVE. However, the attempt failed and USDT bounced back to $1 within a short timeframe. By contrast, algorithmic stablecoins like FRAX, MIM and USDD witnessed more remarkable and sustained damage. As a result, Brad thinks that Tether’s USDT is still one of the safest stablecoins around and he appreciates the proactive work by Tether in their updates as well as the restructuring of their reserves to improve their ability to cushion a potential “bankrun”, praising Tether as being “ahead of the curve” through an extreme period of severe contagion.
Another crypto veteran, Gabor Gurbacs, Strategy Advisor at VanEck, also took to twitter to say that the mainstream media “had it all wrong”, seemingly as a retort to several misinformation published on mainstream media about what had transpired with the FTX scandal. Several large mainstream financial channels had been wrongly reporting on the events in the crypto market last week, with two particular financial publications even predicting that Tether would be the next to fall, without citing any reason to back up their hypothesis.
With even established market journals misreporting many things about crypto, readers ought more to do fact check and conduct your own due diligence pertaining to anything you read about crypto, even more so at a time such as this where fear and bias overrules and clouds even the brightest minds’ objective judgement.