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Analysts express their concerns about Tether’s vulnerability to the FTX catastrophe. In the interim, Tether has published a blog statement outlining how the collapse of Alameda Research will not put Tether in danger.

A famous Twitter user, @coffeezilla, claimed that Tether would suffer the most significant loss in the FTX catastrophe. Seeing that Alameda Research has been the largest user of Tether, the self-proclaimed internet detective stated that things could grow worse.

@coffeezilla released a graphic displaying which cryptocurrency companies use USDT the most. Unsurprisingly, Alameda Research placed first with $36.65 billion.

Without giving more information, @coffeezilla thinks Alameda Research was using USDT for financial gain. However, @coffeezilla was not the only person who worried that Tether could become affected by the FTX collapse. @metabad, a well-known Twitter user, added more information on the subject.

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According to @metabad, it is more challenging to follow Tether inflows than outflows. He continued by saying that cryptocurrency exchanges accounted for more than 80% of all USDT returns to Tether’s treasury. In contrast, over 70% of every USDT issued over the years has been lost.

It is almost impossible to determine who sent the transactions, claims @metabad. He gave examples of how defunct cryptocurrency companies, Nexo, Three Arrows, and Celsius, were using USDT for profitability before the Terra network disaster, into which they had made significant investments.

Tether Disputes Claims That It Is Exposed To FTX Risk

Meanwhile, Tether has published a blog article to clarify its susceptibility toward the FTX/Alameda breakdown. Tether acknowledged in the post that the FTX/Alameda disaster had caused several failures for other crypto sectors. According to the blog post, other businesses would file for bankruptcy in the coming weeks.

However, it moved on to deny any claims that the Alameda failure poses a severe threat to Tether or its token, USDT. Tether completely collateralizes the USDT, which can be redeemed for USD at a 1:1 ratio.

As a result, Tether continues to own any USDT it distributes to Alameda. More importantly, the security underlying the USDT is not recorded on the financial statements of the exchange company.

It was also clear that Alameda was limited to exchanging their USDT for US dollars. According to the blog article, Tether has yet to give Alameda USDT for any reason. As a result, Tether is not owed either by Alameda or FTX.

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George Ward

By George Ward

George Ward is a crypto journalist and market analyst at Herald Sheets, known for his engaging articles on the latest digital currency trends. With a background in finance and journalism, he presents complex topics accessibly. George holds a degree in Business and Finance from the University of Cambridge.