Tether Condemns “Completely False” Backing Rumours

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  • Tether has called rumours of toxic commercial papers being used to back its reserves as “completely false”
  • The company said the rumours were being spread by whales shorting the market
  • Tether also denied association with troubled hedge fund Three Arrows Capital

Tether has condemned a new batch of rumours regarding the backing of its commercial papers and its exposure to troubled hedge fund Three Arrows Capital. The stablecoin issuer has been the butt of rumours suggesting that a large portion of its commercial backing is toxic and being sold at 30% discount while other rumours have suggested that it has exposure to troubled hedge fund Three Arrows Capital. Tether has denied these suggestions, balig it on whales shorting the market.

Rumours Spread to “Induce Panic”

Tether issued a press release this morning to categorically deny that its commercial paper holdings are linked to toxic Asian commercial papers, a rumour that has been spreading on social media in recent days:

Tether is aware of rumours being spread that its commercial paper portfolio is 85% backed by Chinese or Asian commercial papers and being traded at a 30% discount. These rumours are completely false and likely spread to induce further panic in order to generate additional profits from an already stressed market. Tether condemns such attempts which oftentimes see simple users take the biggest hit, while few coordinated funds increase their profits.

Indeed, it is completely plausible that the rumours were started by big players wanting to short the crypto market and saw Tether as a means to do it. If so, the ploy seems to be working, with Bitcoin falling this morning and edging towards the key $20,000 support.

Tether Reducing Commercial Paper to Zero

Tether also pointed to its latest assurance opinion, which claimed that 47% of total USDT reserves are now U.S. Treasuries and that commercial paper makes up less than 25% of its backing. This is in line with Tether’s stated aim of reducing its commercial paper holdings from 20 billion at the end of Q1 2022 to zero, although a timeframe has not been offered for this full process.

Tether has already this week had to clarify that any collapse of Celsius will not have any impact on Tether’s holdings, and denied in this piece that it has lending exposure to troubled hedge fund Three Arrows Capital, which it also says is “categorically false”.

I mean, great and all, but an audit would help.