By George Ward
Despite the potential wealth and enormous opportunity it can provide, the crypto industry is not immune to media attacks. It was again attacked this month by the popular media outlet, Wall Street Journal (WSJ). This time, the target was Tether.
According to the WSJ, the stablecoin issuer has reportedly been obsessed with lending its tokens to consumers rather than pre-selling goods in exchange for hard currency.
The report further claimed that if the company continued this way, it would put the entire crypto ecosystem at risk. This means that Tether would need more liquid assets to redeem requests in times of crisis.
The WSJ claims to have analyzed the stablecoin issuer’s financial records through which it discovered these loan risks. According to recent sources, Tether’s loan risks amounted to about $6.1 billion as of Sept. 30, or 9 percent of Tether’s stake.
The WSJ report must have triggered the response from Tether. The USDT issuer published a compelling article proving the hypocrisy in the WSJ report and the wider mainstream media.
Tether’s Response
As expected, Tether’s reaction to the mainstream media was rife with how the media failed to predict what needed to be predicted. For instance, the sudden crash of leading crypto platforms and how they spent their time trying to bring them down with repeated targets.
However, Tether admitted that the possible loan risks were true. Tether also responded to the WSJ’s claims that its stablecoin (USDT) is subject to a drop in value because the company issues its loans in USDT.
Concerning the WSJ’s allegations regarding loan risks, the company responded thus:
“This is an outrageous claim. The report mistakes the USDT as what the company loans out and the collateral. Instead, we loan out the USDT while collateralizing it with other assets, which are further collateralized.
The company also stated that its stake is expanding rapidly. Nearly 83% of their entire reserves and financial resources are deposited with the US Treasury.
Tether further stated that its loan processing shares similarities with how national private banks lend money to users, including the provision of adequate collateral. The company also explained how it’s always overcollateralized.
“If you have noticed, you would observe that Banks are privileged to have fractional reserves. However, this is not the case with Tether. Our reserves are always over 100% because of the size and quality of the collateral we collect.
With a market share of 47%, and a supply circulation of 65.7 billion USDT, Tether remains the leading stablecoin issuer. For perspective, stablecoins represent 16% of the entire crypto market cap.