HomeCryptoStable CoinTether and the response to Bloomberg: "the reserves are there"

Tether and the response to Bloomberg: “the reserves are there”

Tether has responded to Bloomberg with the words “insinuations and misinformation”, following the publication of a lengthy report in which it discusses the history of Tether, its reserves and its management.

Bloomberg’s report on Tether

Bloomberg Businessweek‘s lengthy article has an emblematic title: “Has anyone seen Tether’s billion?”. The text recounts the rise of Tether, which currently boasts a market capitalization of $69 billion. 

It also refers to CFO Giancarlo Devasini and his past as a plastic surgeon, to the various bankers who have revolved around Tether, and to a whole series of episodes aimed at proving that Tether does not have the $69 billion it claims to have.

What’s more, according to the article, Tether has also lent out its reserves, for instance to Celsius, a well-known crypto lending platform that is itself a lending platform.

The collateralization of Tether

The underlying thesis is that if Tether invests its reserves and that investment is successful, even a 1% gain results in a $690 million increase to its total capitalization.

If a loan were to default, Tether would lose its collateralization. In practice, the law requiring stablecoin that 1 USDT equals 1 USD would no longer apply, as it would have less capital in its belly to maintain collateralization.

In this case, this is the analysis that is being made: if suddenly all the Tether holders decided to convert their tokens back into USD, there would not be enough money for all of them. This would produce a crash of the entire crypto system.

In addition, the newspaper speculates that Tether may have invested in Chinese companies, although Evergrande, the real estate giant on the verge of collapse, is not among those involved.

Senior US government officials, including Treasury Secretary Janet Yellen, are also reportedly involved.

According to Bloomberg, Yellen met with SEC officials last July and discussed the possibility of either regulating Tether as a bank or making USDT tokens a kind of official US currency. The outcome of the meeting was not disclosed by Bloomberg.

Tether Bloomberg
Tether has a 69 billion dollars market cap

Tether’s response

Tether is no stranger to articles in the press questioning its soundness, the nature of its reserves and the track record of its management. This had already happened with the Financial Times last July.

Bloomberg went beyond personal stories, telling of reserves that are not there, or rather, that no one has seen. But Tether is obliged to make its reserves transparent and does so with audits made public every four months, the last of which was on 30 June.

This is why it responded to Bloomberg’s reconstruction without hesitation:

“Crypto—and Tether in particular—are fostering a revolution in financial inclusion, transforming a model that doesn’t work in a modern world. This article does nothing more than attempt to perpetuate a false and aging story arc about Tether based on innuendo and misinformation, shared by disgruntled individuals with no involvement with or direct knowledge of the business’s operations. It’s another tired attempt to undermine a market leader whose track record of innovation, liquidity, and success speaks for itself”.

Tether disputes the characters involved in the article, who have stepped out of the picture, while pointing out that the text is aimed at discrediting the current CFO, Giancarlo Devasini, who despite having a medical background, is making an important contribution to the crypto sector.

“Tether, its management, and its community are working for a more financially inclusive world. While this may threaten the establishment of traditional financial systems, we will continue to work for the underrepresented”.

Tether: the reserves are there

Tether’s rebuttal note then moves on to the thorniest topic: reserves. In this regard, Tether explains:

“Here are the facts: All Tether tokens are fully backed, as we have consistently demonstrated. The company has taken a leadership position in transparency, providing quarterly assurance attestations (as recently as the June 30, 2021 target date) confirming that all Tether tokens are fully backed. And these attestations and statements also confirm the vast majority of the commercial paper held by Tether is in A-2 and above rated issuers”.

Finally, the note highlights Tether’s mission and success. It is the stablecoin with the largest market capitalization, an asset in a changing world, a leader in the ongoing financial revolution, with a final realization:

“Tether makes the crypto economy more efficient”.

And perhaps that might bother someone.


Eleonora Spagnolo
Eleonora Spagnolo
Journalist passionate about the web and the digital world. She graduated with honours in Multimedia Publishing at the University La Sapienza in Rome and completed a master's degree in Web and Social Media Marketing.