“Previously, Tether promised investors to reduce the volume of lending to company partners in USDT stablecoins to zero by 2024 and to work throughout 2023 to improve the quality of stable coin reserves. However, instead of a reduction, we see an increase in the debt of Tether customers from $5.35 billion to $5.5 billion,” the publication reports.
According to WSJ journalists, Tether’s inconsistent lending policy is causing serious concern among crypto investors, as it entails potential risks for the entire industry and increases the likelihood of destabilizing the digital asset market.
Tether’s lending model, in which customers can borrow US dollars in exchange for USDT collateral, has been repeatedly criticized by financial regulators, particularly due to the alleged lack of transparency about the nature of the collateral and the identity of the borrowers.
Tether strongly disagreed with the WSJ and stated that the journalists’ position reflects a lack of detailed understanding of how stablecoins function, as well as common misconceptions about security measures.
“The banking industry faces serious challenges and has proven unable to keep pace with evolving global financial markets. The Wall Street Journal has ignored this countless times in an effort to tarnish the reputation of companies like Tether.” it says
in the response statement of the USDT issuer.
Tether’s administration called the WSJ report a “tabloid-style spread of misinformation” that panders to vested interests and caters to the “old guard” who are averse to innovative change.
“During the second quarter of 2023, we received several requests for short-term loans from customers with whom we have long-standing relationships and decided to honor these requests. We sought to protect them from a lack of liquidity or the sale of assets at unsuitable rates,” says Tether Holdings spokesman Alex Welch.
Earlier, Tether CTO Paolo Ardoino said that the USDT stablecoin issuer had improved the quality of its reserves and moved up three spots in the ranking of the largest holders of US Treasuries.
Source: Bits
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