The unclear nature of Tether‘s financial reserves has been a worry for both the crypto community and regulatory bodies.
Paolo Ardoino, who will soon take over as Tether’s CEO, has stated in an interview with Bloomberg on Oct. 20 that the company aims to offer real-time updates on its reserve holdings in the near future.
Due to its vital function in the crypto world, Tether has been under rising calls to be more clear about the funds backing its USDT stablecoin. USDT is a big name in the crypto stablecoin market, holding around 67% of the market share and being the most traded crypto asset.
After coming under the eye of the U.S. Commodity Futures Trading Commission (CFTC) and being fined $41 million last year, Tether began to publish quarterly reports on its reserves. Yet, some still argue that this is not enough. The most recent quarterly update reveals that Tether holds over $3.3 billion in extra reserves.
Alameda and USDT: Questions Increase
The call for more transparency became louder in 2022, following the collapse of another stablecoin, Terra’s UST, and issues related to the U.S. banking system that impacted its competitor, USD Coin (USDC).
Reports also indicate that the now-closed crypto trading company Alameda Research, run by Sam Bankman-Fried, might have created around $40 billion in USDT. Witnesses, including former Alameda CEO Caroline Ellison and ex-FTX CTO Gary Wang, stated that Alameda had an “unlimited” borrowing deal with FTX. This brings up big questions about where the money used to create Alameda’s USDT came from.
Tether continues to say that it is fully backed by reserves. Still, experts in the market suggest that more disclosure is needed to help investors better understand any risks and examine the relationship between the auditors and the company. In the latest quarterly report, the incoming CEO Ardoino emphasized Tether’s commitment to being transparent, saying,
“We believe that open talk and strong money facts build trust and reliability. This is needed especially in a year that has seen many letdowns in both the banking and crypto sectors.”
