- Tether has hit back at a Bloomberg investigation that cast doubt on the soundness of its operation
- The author claimed that Tether is hiding its true reserve holdings and has a less than glowing history
- Tether argued that the reporting was just rehashing of existing fake news
Tether has hit back at accusations from Bloomberg that the stablecoin issuer does not have the financial backing to issue its coins and that it has never disclosed where it keeps its money. An investigative piece by Bloomberg’s Zeke Faux published yesterday asked questions about Tether’s holdings, its operations, and whether it is a fundamentally illegal operation. Tether denied the claims in a statement published the same day, calling the criticism “a false and aging story arc about Tether based on innuendo and misinformation”, pointing to the publication this year of its holdings breakdown as evidence of its transparency.
Tether Accusations Old News to Crypto Vets
The Bloomberg piece looked at several aspects of the Tether story, from its relationship with Bitfinex and the NYDIG investigation that was settled this year to its exposure to debt in order to print tokens. None of the evidence presented is anything that the crypto world hadn’t heard before, and indeed the supposedly revelatory nature of the reporting may be such old news to those in the space that they have lost their shock value.
In a rebuttal of the piece, Tether said that Bloomberg had simply taken “snippets of old news from various places and dubious sources” and made it “fit a pre-packaged and pre-determined narrative.” The claim that “exactly how Tether is backed, or if it’s truly backed at all, has always been a mystery” they say has been proved otherwise by the publication of their holdings, as reaffirmed by Tether lawyer Stuart Hoegner:
— Stuart Hoegner (@bitcoinlawyer) October 7, 2021
When ‘Fully Backed’ Does Not Mean Fully Backed
At the heart of the dispute seems to be the definition of what it means to be ‘fully backed’. Tether’s claim that all their USDT tokens are fully backed is the same claim made by other stablecoin issuers such as Circle (USDC) and Binance (BUSD). The difference however is that USDC and BUSD are fully backed by dollars in their accounts, whereas USDT tokens are backed by a mix of loans and other debt instruments, with less than 4% being backed by ready money. USDT tokens are therefore fully backed, just not by something that everyone agrees is sound money, least of all Bloomberg.